Apple's NZ unit paid tax amounting to 0.4 percent of its half-billion sales in 2012

Friday 22nd March 2013

Apple Sales New Zealand, the local unit of the iPad and iPod maker, posted a 38 percent jump in full-year sales to $571 million, though the tax department received a payment amounting to just 0.4 percent of that.

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 Sept. 29.

The local unit of the world's biggest tech company recorded a tax paid profit of $5.5 million in the year, down 40 percent from its 2011 earnings. Income tax fell to $2.5 million, amounting to 31 percent of pretax earnings, from $5.1 million a year earlier.

Multinationals like 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 practise 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 Cooperation 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 New Zealand will strongly align with OECD measures in tackling the issue of fairly taxing multi-nationals.

The Inland Revenue Department and Treasury released a report on taxation and multinationals in December.

"On a general level, companies like Apple are the kinds of companies both the IRD and the OECD are thinking of with these reports," said Geof Nightingale, a partner at PwC in New Zealand. Taxation for multinationals has become very complicated, he added.

Apple NZ's 2012 accounts show the vast bulk of revenue went back to other parties in the Apple group to pay for inventory. Purchases of products from within the group amounted to $551.7 million last year, amounting to 97 percent of the local unit's sales.

Apple's Australian spokeswoman Fiona Martin said the company doesn't comment on its operating performance.

BusinessDesk.co.nz

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