APN/The Herald have an article covering that Apple NZ paid 0.4% tax on TURNOVER of $541 million – a story pushed by Labour and David Cunliffe.
Apple’s New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.
Labour’s Revenue spokesman David Cunliffe said that’s akin to paying nothing at all, and letting a corporation get off “scott free” is something New Zealand taxpayers shouldn’t have to stomach.
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 September 29. Apple is the world’s biggest tech company and makes iPads and iPhones.
Its local unit recorded a tax paid profit of $5.5 million in the year, down 40 per cent from its 2011 earnings. Income tax fell to $2.5 million, amounting to 31 per cent of pretax earnings, from $5.1 million a year earlier.
Nowhere in the story does it state want percentage of profit was paid in tax. The story seems to be pushing¬†emotion while being light on facts and data.
But since APN think tax should be paid on turnover I thought I’d check what they paid. After all if you are going to point the finger at other corporates you had better be a corporate citizen than they are.¬†
APN’s financial accounts are online. They helpfully¬†separate¬†out their New Zealand operations at a high level.¬†Total revenue¬†was $287m, down 7%.
On Page 45 it shows their consolidated group turnover of $867 million for 2012. Tax paid on that?
Nothing, zip, zilch.
In fact they got a tax credit of over $68 million. And the year before they got another tax credit of ¬†$48 million. On page 62 they list their tax exposure. They also note that they are in dispute with IRD:
The Company is involved in a dispute with the New Zealand Inland Revenue Department (‚ÄúIRD‚ÄĚ) regarding certain financing transactions. The Company is satisfied that its treatment of the financing transactions is consistent with all relevant legislation and¬†that no tax will become payable. The dispute involves tax of NZ$48 million for the period up to 31 December 2012. The IRD are¬†seeking to impose penalties of between 10% and 50% of the tax in dispute and interest in addition to the tax claimed. In the event the¬†Company is unsuccessful in the dispute the Company has tax losses available to offset any amount of tax payable to the extent of¬†NZ$32 million.
On 22 February 2013 the Adjudication Unit of the IRD advised that it agrees with the position taken by the IRD. Accordingly the¬†Company will be issued shortly with Notices of Assessment denying deductions in relation to interest claimed on certain financing¬†transactions. In response to this step the Company will commence litigation in the High Court of New Zealand to defend its position in ¬†relation to this matter.
So IRD thinks they owe tax, they don;t think they do, but if they do have to pay it then they still don’t care because they have plenty of tax credits¬†available¬†to offset it. They are bleeding so much red ink that it is unlikely that APN will pay tax for the foreseeable future. They have $611 million of accumulated losses.
To be fair that is probably because they are a dying¬†company in a dying industry and they are making losses year on year.
But it also means they should know, better than anyone, that a company does not and should not pay tax based on turnover.¬†APN, on the basis of their article about Apple should be paying tax, right now they aren’t paying anything. They are corporate hypocrites.
From¬†the¬†accounts, as a little aside at least we now know how much it cost to relaunch the tabloid form of the NZ Herald…$2,939,000!
Decent journalists, trained and skilled…. yeah right.