Apple result spurs tax option call

David Clark
David Clark
LAbour Party revenue spokesman David Clark is calling on the Government to investigate tax options for multinational technology companies operating in New Zealand after Apple released its New Zealand profit figures yesterday.

Apple Sales New Zealand, the local unit of the iPhone, iPad and iPod maker, almost doubled its annual profit on largely flat sales, while extracting a dividend that eclipsed earnings.

Reported profit jumped to $10.5 million in the 12 months ended September 28, from $5.5 million a year earlier, while sales slipped 1.5% to $565.6 million, according to the company's financial statements lodged with the Companies Office.

The local unit of one of the world's most recognisable companies paid income tax of $3.9 million in the year, up from $2.5 million in 2012. Apple is one of a number of high-profile multinational companies criticised for minimising tax by routing profits through offshore subsidiaries.

Dr Clark said in an interview the Government was ''sitting on its hands'' when it came to tax issues.

Finance Minister Bill English was asked in a select committee last week why the Government was taking little action on tax issues, he said.

''He said there were few credible options for taxing multinationals and New Zealand did not want to get ahead of the market. Nothing has really changed in the past year, despite the Government's toughening rhetoric.''

The Organisation for Economic Development was discussing measures to clamp down on such arrangements, and Revenue Minister Todd McClay said New Zealand tax department officials would be participating in the Paris-based talks this week.

Dr Clark said New Zealand had more at stake than many other countries because it saw its future in technology. New Zealand was competitive and had a market advantage - provided tax laws were supportive of local industry.

New Zealand technology businesses ended up paying a ''significant portion'' of their income to support infrastructure, such as schools, to help provide the next generation of technology workers, Dr Clark said.

''Multinationals come in over the top, pay little tax and take the profits from hard-working New Zealanders.''

Dr Clark advocated investigating the possibility of taxing multinationals' revenue. But he said Apple was not as bad as either Facebook or Google at avoiding tax in New Zealand.

Apple NZ's accounts showed the local unit was flush with cash during the year, with cash and equivalents rising to $26.5 million as at September 28 from $4.3 million a year earlier. The company paid a $14.8 million dividend in March last year, its first since the 2010 financial year, when it returned $33 million to its parent.

The bulk of Apple NZ's revenue went to related parties in the global group. It spent $531.5 million buying inventory from related parties, down from $539.2 million in 2012. Its total cost of sales was $541.4 million, leaving it with a gross margin of 4.1% in the 2013 year, slightly wider than the 3.4% achieved a year earlier.

Apple NZ sold $552.8 million of goods in the 2013 year, down from $561.3 million a year earlier, while service fee income rose to $11.9 million from $9.7 million.

- Additional reporting BusinessDesk

ODT/directory - Local Businesses

CompanyLocationBusiness Type
AA InsuranceDunedinInsurance
Beaurepaires For TyresOamaruWheels & Tyres
I Clean SpoutingDunedinSpecialist Trades
I Love MerinoDunedinClothing