> That 0$ is their NZ income tax. Obviously they pay all other taxes for their properties and employees. It is just that New Zealand and Australia have an income tax deal
>> Apple's New Zealand operations are wholly owned by an Australian parent and appear to be run from there. A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.
>> Russell, recently selected as the Labour Party candidate for the safe New Lynn electorate for September's general election, said Apple's tax arrangements were totally consistent with the law.
> So Apples NZ income tax is paid to Australia. All other NZ taxes are paid to NZ. Hilariously the tax rate in Australia is higher than in NZ
>> The accounts for Apple's New Zealand subsidiary disclose in notes that income tax is paid at 30% - the rate in Australia - not the 28% charged in New Zealand. This reference has been in every financial statement filed by Apple with the Companies Office since at least 2007.
The first point is completely irrelevant. Beyond that, it doesn't really seem to matter – is anyone claiming that this is illegal versus a sign that the NZ legal system needs to change?
The article was talking about corporate income taxes. The fact that they also paid property taxes doesn't add much to the conversation, and that's even more the case about whether their employees happened to pay personal income taxes.
Would NZ really be better off if it got to tax the NZ revenue of Australian companies operating in NZ but gave up being able to tax the Australian revenue of NZ companies operating in Australia?
Given that Australia both NZ's largest trade partner and much larger (and somewhat wealthier) than NZ, isn't it likely that quite a lot of NZ companies earn significant amounts of revenue in Australia?
Would NZ even come out ahead from such a change, even ignoring the (very significant) costs of a massive change to the tax code? Because offhand it doesn't look like it.
I'm not saying it needs to change but that seems to be the argument of people like the Green Party member quoted. If the intention is to have a corporate tax it seems like a problem if huge amounts of money are exempted.
NZ and Australia have a tax treaty so companies pay taxes where they're based. Apple's Aus/NZ operations are based on Australia, so they pay the (higher) Australia rate to the Aus government, instead of the (lower) NZ rate to the NZ government on their NZ profits.
Meanwhile, companies based in NZ are paying no taxes in Australia. WHEN WILL THIS MADNESS END?
$4.2 billion in sales, subject to 15% GST, suggests $630 million in tax revenue to the NZ government. Not a bad tax take from an operation that runs out of another country.
Apple doesn't pay the GST on the sales, that is paid for by the consumers. (Yes I know that is a gross simplification but that is the general idea of GST - it is a consumption tax).
Whether the consumer pays the tax on top of the retail price, or the producer raises their prices and pays the tax out of their end, it is all the same.
It's an oversimplification but mostly accurate. A 15% GST affects you and your competitors and competitive products identically, so they all raise prices to compensate so consumers pay it.
Income taxes are a little different, one business may be more profitable than a competitor, and they may have different profit margin requirements to justify building/selling their products, so the adjustments are going to be different per company. But essentially prices are adjusted fir tax levels within what demand allows.
Imagine income tax is increased from 0% to 50%, any business that was already making marginal profits needs to increase prices or go out of business. Assume Dell makes 4% profit margins on pcs, and Apple 20%, Dell can increase prices 2% to retain its after tax profit levels, Apple needs to increase prices 10%, but may not be able to given its competitor Dell did not.
I agree that it is an oversimplification to say the effects are exactly the same, but my point was just that the price will go up and the consumer will pay more regardless of where the tax is levied.
One part that is different and really irritates me - some places allow products to be advertised at a price excluding taxes. Include the tax in the price always, no other value is relevant to me.
Correct. Most financial reporting doesn't count GST collected as revenue. There are circumstances where this isn't true but generally it's booked as a liability.
> Correct. Most financial reporting doesn't count GST collected as revenue.
You seem to be assuming that, if GST was zero instead of 15%, the prices consumers paid for Apple products would be 13% lower than they are now, and that despite these lower prices no additional purchases would occur. Why?
Because that's not how I understood your question. I interpreted it as asking if GST is included as part of revenue then expensed. This is not the case as GST is a tax collected on behalf of the government so it is always regarded as a liability.
As to what you intended, perhaps. Perhaps not. I'm not an expert in sales of Apple products, you'd need market research to see if a 13% discount would result in an appreciable amount of sales.
They sell goods and services to people with a physical presence in New Zealand. New Zealand supplies the infrastructure to make these sales possible. So why should it even matter?
Because we're talking about corporate profit taxes, not sales taxes. They already pay sales taxes in NZ (or collect from customers).
>> Apple's New Zealand operations are wholly owned by an Australian parent and appear to be run from there. A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.
So if an NZ company sells products in Europe or US or Australia, they should be taxed in all those countries instead of NZ even if the product is fully developed in NZ?
Because you shouldn't owe income tax to a country you don't reside in. If a NZ citizen buys from Apple.com and has it shipped to NZ, why should Apple owe both the US and NZ income tax?
Let's not forget about sales tax. $4.2B amounted to $630M in taxes. Plus the import tax, which would be another $630M dollars.
And then take into account that they have stores and employees and have to pay taxes accordingly. And then there's the investment poured in to generate those entities.
Pretty soon, it looks pretty reasonable that the goverment allows things like this to be structured because otherwise, taxes would be a deterrent for companies looking to enter the market.
For the most part, corporate income tax is dumb. Corporations have a lot more options than individuals, to which corporate profits generally flow eventually, to play games with where they file for different parts of their operations.
That said, I don't really expect major changes. Corporate taxes are a lot less unpopular than individual taxes. So the fact that they're avoided a lot of the time is just how it is.
States already pay for corporations to relocate hoping to make it up by increased employement and ancillary busineses. I don't imagine that in many cases, local governments have basically given money to the corporation with the expecting proceeds not materializing.
Corporations with the advent of the WTO and other globalization efforts have essentially made it impossible for nations to actually tax them.
How does this change and if such taxation doesn't hold, will the states also eventually become antiquated?
Our governments here in Australia/NZ are convinced huge tax breaks are the only way to keep businesses here and generating jobs. I really don't know if there is a better way but they are certainly scarred of more things moving overseas.
>> Apple's New Zealand operations are wholly owned by an Australian parent and appear to be run from there. A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.
As far as I have been able to tell from the behaviour of those who believe this kind of thing, the correct authority to consult to determine ethical tax liability is the sub-editor in charge of writing headlines for whichever newspaper one reads.
You know, there are things that are legal, but you know are unethical and you don't do them. Refusing get up to let an elderly woman sit on the bus is not illegal, but you do it because it's the right thing to do.
Apple go to great lengths to make their taxes 0, doing things that small businesses would never be able to do. If they didn't their taxes would be hundreds of millions. This—alongside depriving California and the States of money that could be used for the community—makes it unethical IMHO.
Because words have meaning, and misuse of a word for personal gain is a morally questionable at best. This is the whole issue about marketing and advertisement: making you believe with pictures and words that the product being promoted is what you need at this moment.
> ... and misuse of a word for personal gain is a morally questionable at best.
Again, agreed, but where's the personal gain? How many additional people buy Macs because they call these people "evangelists"? Or, how many people are willing to work for Apple for lower pay because they're going to get the title of "evangelist"? I don't see the personal gain aspect of this.
And that leaves me thinking that it's just a word that conveys enthusiasm, or possibly the bringing of good news, but it's just getting cute with a job title, with no moral dimensions.
The personal gain on the side of the impersonal entity that is the company using it. By using such a loaded word, Apple (in this case, but apparently other companies have followed suit) is playing on the fact they are promoting their brand with a degree of "truth" attached to it. I am not sure what exactly truth they might be thinking, but their have surely entertained the meddling with a word that has strong religious and truth connotation. I might be reading too much in it, but I wanted to see if anyone else felt the same way. After all a techie crowd is bound to have strong opinions about the tools being used. :)
To clarify individuals don't directly pay the tax. All sales of goods and services have 15% tax added. It's collected by the companies and remitted to the government.
Since all prices have the 15% added most people don't pay attention to it.
> That 0$ is their NZ income tax. Obviously they pay all other taxes for their properties and employees. It is just that New Zealand and Australia have an income tax deal
>> Apple's New Zealand operations are wholly owned by an Australian parent and appear to be run from there. A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.
>> Russell, recently selected as the Labour Party candidate for the safe New Lynn electorate for September's general election, said Apple's tax arrangements were totally consistent with the law.
> So Apples NZ income tax is paid to Australia. All other NZ taxes are paid to NZ. Hilariously the tax rate in Australia is higher than in NZ
>> The accounts for Apple's New Zealand subsidiary disclose in notes that income tax is paid at 30% - the rate in Australia - not the 28% charged in New Zealand. This reference has been in every financial statement filed by Apple with the Companies Office since at least 2007.
It provides [1] as its source.
[1]: http://www.documentcloud.org/documents/3515916-Apple-2016.ht...