​Examining Apple’s complicated relationship with NZ

​Examining Apple’s complicated relationship with NZ

Tech giant’s tax bill leaves sour taste for Kiwis but love affair with Cupertino remains strong.

What a week it’s been for Apple in New Zealand.

Forget the unveiling of a flashy new red iPhone 7, a storage boost for the iPhone SE and a cheaper iPad price - there's a much bigger story at play.

On the one hand, the country is aghast following revelations that the tech giant paid zero tax in New Zealand for over 10 years, despite reporting sales of $4.2 billion during the decade just passed.

Uncovered by the New Zealand Herald, the company dodged the tax office on a spectacular scale, “using every trick in the book” to avoid making payment.

Yet as one half of the nation condemns Cupertino, the other rejoices at news that the vendor has opened an office in Wellington, as a base to develop augmented technology reality.

According to Bloomberg, Apple has lured several employees from Weta Digital, tapping the local expertise of the Wellington-based special effects business.

Unsurprisingly, the move has left “local technologists buzzing”, creating an interesting dynamic across the local industry as a result.

Because as the industry attempts to eradicate tax avoidance by multi-national corporations, of which Apple is a chief culprit, it simultaneously displays the qualities of a crazed worshipper, rendering such a serious stance almost redundant.

In light of the company’s inability to pay what is required at a local level, American-based Apple users have weighed in behind Kiwi politicians.

First observed by the New Zealand Herald, Bryan Chaffin of The Mac Observer urged the tech giant to "do the right thing", even though that would result in decreased profits for the company's demanding shareholders.

And of course, hard working Kiwi taxpayers have every reason to feel outraged by revelations that a titan of the industry, with billions of dollars of New Zealand revenue, has paid no New Zealand tax over ten years.

“Nurses, cleaners, office workers, and small business owners, who pay their fair share of tax to support public services in our country, will be dismayed at these latest revelations,” Labour Party Revenue spokesperson, Michael Wood, said.

“We know that this is the tip of the iceberg for big multi-nationals being let off the hook by the National Government being completely asleep at the wheel.

“Cabinet was officially warned about the huge scale of multi-national tax avoidance five years ago, yet as late as last year the Revenue Minister was saying there was no problem and he’d seen no evidence to suggest New Zealand was missing out. It’s obvious that we are.”

According to Wood, the government has been forced into “belated action” by the media and the opposition, and even then are refusing to consult on the option of a diverted profit tax, which has been employed to deal with this issue in Australia and the UK.

“New Zealanders expect their government to take a stand when it’s revealed that a multinational company has been avoiding hundreds of millions of dollars in tax,” he added.

Yet while opportunist politicians fight for airtime in a bid to condemn Apple - albeit correctly - the attitude on the street appears to differ.

Why? Because New Zealand is all for Apple.

Backed up by IDC research, Apple sold 221,000 phones locally in the three months to December, as customers continue to religiously consume high-end iPhone handsets.

Furthermore, the vendor recently edged Microsoft in a Kiwi detachable market totalling 80,000 devices, reporting a market share of 32 per cent during 2016.

According to IDC findings, only one thousand shipments separated top two vendors in New Zealand with Apple capturing the top spot from its closest rival Microsoft, which lost its crown for the first time since 2013.

Specifically, Apple grew close to 650 per cent year over year, off a small shipment base, due to entering the market late in 2015.

Even closer to home however, at the heart of the New Zealand Government, the love affair deepens.

Currently, government departments purchase in excess of over a thousand Apple devices per year, which doesn’t include District Health Boards or other agencies.

“Why do some global corporates pay tax on New Zealand earnings but Apple doesn’t?” New Zealand First Leader and Northland MP, Winston Peters, added.

“The way some Ministers talk up Apple you’d think they were on commission.”

As a result, Peters is calling for better rules for government purchases given Apple, which fails to pay any tax here, has also been the dominant supplier of mobile phones.

“Why would a government spend taxpayers’ money with a foreign corporation which manipulates the system so it does not pay a fair share of tax in New Zealand?” he questioned.

“These companies reduce what tax they owe in New Zealand through complex ‘related party finance transactions’.

“Why would the New Zealand taxpayer buy off a company that is prepared to milk this country and give nothing back in return.”

But despite the political elite weighing into the debate, the Kiwi taxpayer is in fact more than happy to buy off a company deliberating dodging tax, such is New Zealand's complicated relationship with Apple.

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