Monday, March 20, 2017

Apple shouldn't pay NZ taxes

A great deal of fuss has been made in the past few days about the fact that Apple Computer pays no tax in New Zealand. Green Party "co-leader" James Shaw says Apple is not paying its "fair share" on sales of $4.2 billion over 10 years in New Zealand.

I beg to differ. Leaving aside my libertarian beliefs that no one should be compelled to pay any taxes, there is a very good reason Apple pays no tax in New Zealand. Apple designs its products in California and runs its worldwide operations from there. It manufactures most of its products in China, and it runs its sales and support operations for New Zealand out of Australia (and for some services out of Ireland). There is no direct presence in this country and New Zealand doesn't add any value to its products and services. Under international taxation rules, the country where the value is added is the country in which where the revenue should be accounted for taxation purposes.

Now let's look at what value Apple provides to New Zealanders. Even James Shaw admits "I really like Apple products - they're incredibly innovative", so obviously he gets a lot of value from them. I know I do - they enable me to run my business with no administrative staff and provide me with an incredibly efficient set of tools that are worth far more to me in time saved and professional image than I pay for them. I am grateful for Apple for the innovation and reliability of its products and services and I don't think Apple owes me anything more than that.

In any event, it is not true to say that Apple pays no taxes - it paid Goods and Services Tax on those $4.2 billion worth of sales. So New Zealand is already getting something for nothing.

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