Apple’s tax bill could have implications for New Zealand

Cashmanager | 8 years ago

New Zealand tax officials will be paying close attention to the European Competition Commission ruling that sees tech giant Apple deemed to owe Ireland €13 billion (NZ$20.08 billion) in unpaid taxes, plus interest.

The ECC ruled that a series of tax breaks given by Ireland to Apple reduced the company’s effective tax rate to just 0.0005%.

 

Prime Minister John Key said the ruling would make interesting reading but he isn’t sure if it contains any lessons for NZ, as every country’s tax laws are different.

The NZ Herald reported that Key said New Zealand expected multinationals to pay their fair share of tax and it was part of the OECD working group to see if potential loopholes could be tightened.

He said Apple in New Zealand was probably paying its fair share of tax "if you look at the current tax rules and the way they intersect with the different tax rules around the rest of the world."

"I don't have any advice that they are doing anything illegal, that's for sure.

"But the question is whether the mismatch of all of those rules is something these multinationals can arbitrage, and if they are, then we would say on balance that's not fair even if it's legal." 

"That's really what the OECD is trying to do - to try and say 'well collectively, can we all hold hands and make sure that those loopholes disappear.'

"We expect a New Zealand company to pay its fair share of tax; we expect a New Zealand citizen to pay their fair share of tax. Should we expect a multinational to play by different rules?"

 

It is not uncommon for tech companies to use these different rules to move money between countries in order to minimise their tax bills. 

It was reported earlier this year that ride-sharing app Uber paid $9397 in tax on gross revenues in New Zealand of over $1 million in 2014.

 

Both Apple and Ireland will appeal the ECC’s decision. Ireland’s Finance Minister said that the country had the right to set its own tax rates. The appeal is likely to take at least two years, so there’s no windfall for Ireland in the near future.