The European Commission has ruled that Apple owes €13bn in back taxes there. It’s likely that Apple owes New Zealand our fair share of back taxes too.
The New Zealand Government collected close to $11 billion in taxes for companies last year. If New Zealand companies paid the tax rate Apple does in Europe — 0.005 percent — we’d collect only $3 million in taxes that pay for our hospitals, our schools, and our stable democracy. That’s a shortfall of $11 billion.*
Last year, Apple in New Zealand had revenues of $732 million. Due to Apple’s cost of sales being so high — 96 percent of revenues or $702 million — Apple’s profit before tax was only $27 million. As a result, Apple paid only $6.4** million in taxes here.
Given the absurdly low amount of tax paid, it’s likely Apple is exploiting the same legal loopholes here that it does do elsewhere to avoid paying its fair share of tax. Apple, and companies like it, need to be challenged on how little tax they pay here in New Zealand.
Apple, like all companies, benefits from the public investment our taxes enable.
It’s not just the Green Party that thinks multinationals like Apple are not paying their fair share of tax here. The OECD does too. They call it tax avoidance and estimate there’s a $100-240 billion global tax shortfall each year.
The National Government are taking a wait-and-see approach on multinational tax avoidance. They’re sceptical companies like Apple are doing anything wrong or owe any back taxes.
Unlike in Australia and the UK, National are not moving quickly to shut down this tax rort, or setting up tax penalties that may one day enable us to recoup lost taxes.
National are weak on standing up for tax fairness and ensuring New Zealand businesses aren’t put at an unfair disadvantage relative to their international competitors simply because they pay their fair share of taxes.
* Rounding hides any decrease in the number because the difference is so small.
** Revised to reflect actual tax paid.