Apple Pays Zilch in New Zealand Taxes on $4.2 Billion in Sales

Apple paid roughly zip to New Zealand Inland Revenue—that country’s taxing authority—over ten years, even while selling $4.2 billion in merchandise in the country. The practice is scrupulously legal—and therefore OK in the eyes of many. I, however, don’t think it’s right.

The Situation

Apple is a world leader in structuring its global operations so that profits are accounted for in low-taxing districts, regardless of where its products were actually sold. Apple pays enormous taxes in the U.S.—it’s the largest taxpayer in its home country—but it pays next to nothing in most parts of the world.

As stated above, these practices are assuredly legal. At the very least, Apple’s tax practices have survived intense scrutiny from countries where Apple pays little or no taxes. The closest thing to a legit legal challenge to Apple’s practices has been questioning from grandstanding U.S. Senators and a most-likely-to-fail complaint against Ireland by the European Union.

To that end, Apple Australia issued this statement to The New Zealand Herald:

Apple aims to be a force for good and we’re proud of the contributions we’ve made in New Zealand over the past decade. Because our products and services are created, designed and engineered in the US, that’s where the vast majority of our tax is paid.

All Politics (and Sales) Are Local

At least some New Zealand politicians aren’t having it. Green Party co-leader James Shaw told The Herald:

It is absolutely extraordinary that they are able to get away with paying zero tax in this country. I really like Apple products – they’re incredibly innovative – but it looks like their tax department is even more innovative than their product designers.

That’s the thing. Companies with local operations should pay their fair share of taxes to local taxing districts. Roads, schools, services—all of these things are used to support Apple and its employees. All of these things support each and every Apple sale to local residents. Apple should pay its fair share to support the things that make those sales possible.

I’ve made this argument before, and plenty of people disagree with me. To them, Tim Cook has a fiduciary responsibility to maximize profits for its shareholders, the end. The same is true for every other CEO of American corporations large and small.

Next: Do the Right Thing, Apple’s Good, and Final Thoughts

Page 2 – Do the Right Thing, Apple’s Good, and Final Thoughts

Do the Right Thing

But here’s the thing: just because we can do a thing doesn’t always mean we should do a thing. When we pay blind allegiance to corporate profits above right and wrong, we have lost our way. Tim Cook cites Martin Luther King, Jr. frequently about the importance of standing up for what you believe.

Timeless words from #MLK, “Our lives begin to end the day we become silent about things that matter.”

— Tim Cook (@tim_cook) January 19, 2015

Not paying local taxes is something that matters to me, and I’m a tiny, insignificant $AAPL shareholder. From city, county, and state deals where companies negotiate sweetheart deals, to corporate structures that shift where profits are generated, it may be legal to avoid taxes, but that doesn’t make it right.

Apple Does So Much Good

There are so many areas where Apple does enormous good—far, far more good than any other electronics giant, and probably any other for-profit company.

Apple goes above and beyond in minimizing its environmental footprint, even in countries where regulations are nonexistent or unenforced. Apple has also been aggressive and innovative in developing multitudinous renewable energy sources for its global operations.

Apple should be lauded for this, loudly and clearly.

Apple wrongly takes heat for its labor practices in China, when I believe the company should be praised for improving workers’ lives with higher wages, worker training, and constant monitoring of the companies it works with. No other American outsourcer I know of has taken such strong steps to protect worker rights outside the U.S.

Apple’s record on diversity is also outstanding, especially under CEO Tim Cook.

But local taxes matter. Roads matter. Schools matter. Housing authorities matter. Health care matters. Regulation enforcement matters. All of the things that support civil society matter. Apple’s profits are made possible by that civil society, and the company should contribute its fair share.

As should every other company, whether or not there are legals ways to avoid doing so.

And Finally

I’m not trying to pretend this is an easy topic, and I sure as heck won’t pretend to know precisely what Apple’s “fair share” is. But it’s clearly more than “nothing.”

According to The New Zealand Herald, “Had Apple reported the same healthy profit margin in New Zealand as it did for its operations globally it would have paid $356m in taxes over the period.”

That kind of money matters to countries the size of New Zealand. To me, Apple should kick in to help pay for the civil infrastructure it needs to make those profits.

And I won’t be silent about it.

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