Apple paid just $8.9m in NZ taxes last year

(Reuters)
(Reuters)

New Zealand tax officials will be taking a close look at the European Union's ruling that Apple must pay €13 billion (NZ$20 billion) in taxes to the Irish government, Prime Minister John Key says.

The EU regulators on Wednesday ruled that a special scheme to route profits through Ireland was illegal state aid.

"Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other bussinesses over many years," the regulators said.

Apple and the Irish government have said they will appeal the ruling.

Mr Key says he doesn't know whether there's anything that can be taken from the ruling.

"No doubt our officials will go and look at exactly the loophole they are closing down, and how they have decided to apply that tax liability," he told reporters.

"But every country's tax rules are different and Apple will be a much more significant multinational in Ireland than it is in New Zealand... I'm sure our officials will have a look and see if there are any learnings they can take from it."

Asked whether multinationals were paying their fair share of tax in New Zealand, Mr Key said they probably were.

"I don't have any advice that they're doing anything illegal, that's for sure," he said.

Mr Key says the issue is the mismatch between tax rules in different countries and whether that's something multinationals can use to their advantage.

"If they are, then we would say on balance that's not fair, even if it's legal."

Mr Key says New Zealand is working with the OECD to close loopholes, which is the best way to deal with the issue.

"Lets' be honest about it," says British tax expert Professor Richard Murphy. "Apple is a tax avoider, but there's nothing illegal about that. They've worked out how to make the system work to the best effect."

Apple channels its foreign profits through its Headquarters in Cork. In the UK it would pay 20 percent company tax. In New Zealand it would be 28 percent. But Ireland has a corporate tax rate of just 12.5 percent.

Sweetheart deals with the Irish government meant it actually paid just 0.005 percent in 2014.

The Irish government maintains Apple pays the right tax.

"I think it's on very tenuous grounds," says Irish Finance Minister Michael Noonan. "The Irish authorities at the time did nothing improper or illegal and there's a government meeting in the morning. I'll be proposing an appeal."

Apple creates jobs in Ireland.

Furious, Apple has released a statement saying: "The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process."

It warns the decision "will have a profound and harmful effect on investment and job creation in Europe".

Steve Jobs opened Apple's Ireland office in 1980. It's about to face its biggest fight there since - Apple versus Europe.

So what about here?

Last year Apple made $732 million in New Zealand, but the cost of buying the products from its parent company is so high, the company's profit before tax was just $27 million, meaning Apple - one of the biggest companies in the world - only paid $8.9 million in taxes here last year.

Newshub. / NZN