SORRY APPLE - THE HOLIDAY HERE MAY BE OVER. TIME TO PAY TAX.
By Richard Harman (author)
New Zealand looks ready to crack down tax on dodging US tech companies like Apple who pay very little tax here.
For the year ended September 28, 2013, Apple paid $3.9 million New Zealand tax on a turnover of $571 million.
Apple routes its profits through Ireland where it has a deal to pay only 2% on its profits.
But the European Union is cracking down on that and the company has recently admitted it may have to pay extra tax going back over 10 years.
That crackdown is a part of a broader crackdown by the OECD on multinational companies choosing easy tax jurisdictions to minimise their taxes.
Revenue Minister Todd McClay told Parliament’s Finance and Expenditure Committee said that while New Zealand would be adopting most of the OECD’s recommendations on how to crack down, by themselves they were not an overall solution to tax base erosion and profit shifting.
The reason for that is that there are a number of companies around the world who’ve been legally structured into lower tax jurisdiction and they are doing this for tax advantage and tax gain,” he said.
“I can’t answer the question as to whether x, y or Z Company is paying their fair share of tax in New Zealand.
“But when one looks at some companies and sees how little they pay compared to the amount of business they have – the taxpayer would be right to be concerned that they might not be.”
Mr McClay said one solution was a greater exchange of information between tax jurisdictions.
“That way the IRD knows what they are doing in Australia or the UK or Ireland or any of the other jurisdictions,” he said.
“We have a better chance to make sure that we are setting our tax rules and co-operating with others so they pay their fair share of tax.”
He said there were an increasing number of countries around the world who were co-operating more than New Zealand had thought they would.
“There are a couple of countries in Europe – the Netherlands and Ireland –who have structures that whilst legal gave other tax jurisdictions concern.
“They’ve indicted they are willing to move and change those structures which I welcome.
And he said some of the companies that “you hear of the most around those jurisdictions” were indicating they were going to start to change their tax practices.
“My advice to them is New Zealand is a very good and fair place to be based.
“Come down here and pay your tax.”