Apple's NZ unit coughs up 0.4pc tax

Labour's Revenue spokesman David Cunliffe said letting a corporation get off "scott free" is something Kiwi taxpayers shouldn't have to stomach. Photo / NZ Herald

Apple's New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.

Labour's Revenue spokesman David Cunliffe said that's akin to paying nothing at all, and letting a corporation get off "scott free" is something New Zealand taxpayers shouldn't have to stomach.

Apple's New Zealand sales topped the half billion dollar mark in 2012 after rising to $414 million in 2011, according to its financial results for the 12 months ended September 29. Apple is the world's biggest tech company and makes iPads and iPhones.

Its local unit recorded a tax paid profit of $5.5 million in the year, down 40 per cent from its 2011 earnings. Income tax fell to $2.5 million, amounting to 31 per cent of pretax earnings, from $5.1 million a year earlier.

Multinationals such as Apple, Facebook, Starbucks and Google have come in for criticism for structuring their global businesses to minimise tax payments. The New York Times last year named Apple as the inventor of the "Double Irish With a Dutch Sandwich", a term coined to describe a practice of reducing taxes by routing profits through Irish subsidiaries then the Netherlands and finally Caribbean tax havens.

While the structures are technically legal, the huge reduction in tax owed prompted the Organisation for Economic Co-operation and Development to call for a worldwide crackdown on that kind of behaviour. It released a report into tax avoidance in February urging countries to work together to beat tax avoidance.

Revenue Minister Peter Dunne said last month that NZ would strongly align with OECD measures in tackling the issue of fairly taxing multinationals. He was unavailable for comment last night.

The Inland Revenue Department and Treasury released a report on taxation and multinationals in December. Mr Cunliffe said it was clear tech giants like Apple were difficult to tax in a single jurisdiction but it would be a "cop-out" to say that the solutions to tax avoidance could only occur at OECD level.

"I think Peter Dunne is taking the easy way out. What we need is a staircase approach where we take some measures domestically that are within our power and in parallel we work on multilateral solutions."

Labour is doing a major research project on cross border taxation of multinationals and would announce policy before the next election.