Labour says Apple et al plundering NZ economy

January 30th, 2014 at 7:03 am by David Farrar

continue with their jihad against the tech giants. From Hansard yesterday:

Hon : … Neither do we think it is fair that some of the multinationals plunder the New Zealand economy—like , like , like —take hundreds of millions of dollars out of the New Zealand economy, compete with New Zealand – based companies, and pay virtually no tax. 

Wow I didn’t know that there were NZ companies competing with Apple, Google and Facebook. Is David Parker saying that Microsoft, Yahoo and Bebo are NZ based companies?

But regardless we can all agree that multinationals who plunder the NZ economy are evil and must be shunned. I await all Labour MPs giving up their iPhones and closing down their Facebook accounts.

As I have often pointed out Fairfax and APN also pay virtually no (income) tax. Will Labour shun these multinationals also?

We in the Labour Party are willing to move on that, but the Government is not because once again it is preferring the interests of the wealthy. It is not willing to take on the multinationals, despite the fact that there is a glaring unfairness there, that they should pay their fair share of tax too, which they do not, and that there are mechanisms that could be used. 

Here’s my challenge to David Parker who wants to be Minister of Finance. It is a very simple challenge. Name these mechanisms that can be used. You don’t even have to name them all. Just name one of them. Just give us one specific example of how they would change the law in a way that would require those companies to pay more tax?

In related news, 3 News reports:

Banning Facebook was an extreme suggestion from Labour Party MP – and it took party leader David Cunliffe just 24 hours to shut it down.

Mr Cunliffe has now ruled it out completely, but ridicule from the Government still came hard and fast.

Half the population, nearly 2.3 million, are on Facebook, and Mr Cunliffe’s own page has more than 8000 likes.

The social networking website has been accused of avoiding paying its fair share of taxes in New Zealand.

To recoup the cost, yesterday, Labour’s tax spokesman David Clark suggested the Government should “always have in its back pocket the ability to ban websites as an extreme option”.

But Russell Norman says he thinks it is “ridiculous” to consider banning Facebook or any other website.

When the Greens call a Labour policy ridiculous, you know how bad it is.

Labour’s musing on banning Facebook has even gone international, making the International Business Times.

Anyway the next time you see a Labour MP using an iPhone or iPad or Apple laptop, make sure you tell them off for using an evil company that plunders the NZ economy.

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136 Responses to “Labour says Apple et al plundering NZ economy”

  1. kiwi in america (2,314 comments) says:

    Parker, Cunliffe and Clark also need to explain why Helen Clark and Michael Cullen never put before Parliament a single amendment to the Income Tax Act in their 9 years in office to redress this terrible plunder of the NZ economy by Apple, Google and Facebook, all of which were operating in New Zealand in the term of the 5th Labour Government.

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  2. Kea (13,554 comments) says:

    I am really enjoying this series on emerging Labour policy. I am especially delighted Labour is gaining the interest of the younger voter by touching on policy areas that matter to them, such as banning the internet !

    You are a very fortunate man John Key. :)

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  3. Pete George (23,793 comments) says:

    Good grief, the gaffes and goofy Labour agendas continue.

    “Labour face disaster at the next election” – and that would be bad for NZ politics.

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  4. igm (1,413 comments) says:

    Parker plundered NZ taxpayers when, through inept trading, he went broke. How could anyone in their right mind pay credence to this loser on anything fiscal, or his leader, a proven liar, with a fraudulent CV? They only seem to appeal to the envious and losers in our fragile society.

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  5. radvad (734 comments) says:

    We hear various numbers from Labour about the income and actual tax paid by these “plundering” companies. I want to know two things:
    1. What does Labour consider to be the correct amount they should pay and how they calculated it. This would give support Labour’s claim they are not paying enough, otherwise it is just an unsubstantiated accusation.
    2. Does Labour claim these companies are illegally avoiding/evading tax.

    The irony of all of this of course is that government is the biggest plunderer of our economy and Labour’s default position is always to expand that plundering.

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  6. martinh (1,272 comments) says:

    There are definitely nz companies competing for on line advertising of hotels etc which Nzers are currently paying google big $ for- Wises for example is in competition to GoogleMaps .
    More research before being cynical please DPF

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  7. AJC (16 comments) says:

    Agree with all that but interesting to note that as transactions for the likes of movies/music games go online there will be a loss in GST revenue.This is because the likes of Apple have servers based overseas. Apple for example pays GST on their Australian sales as their server is based in Sydney but sales to New Zealanders are effectively GST exempt. Dont think there is anything the government can effectively do but there is a revenue loss which has to be made up elsewhere.

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  8. tvb (4,553 comments) says:

    National could rightly campaign that don’t vote Labour because they will threaten your Facebook account and your iphone. The only people plundering the NZ economy are the welfare bludgeons whom Labour gain much support.

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  9. martinh (1,272 comments) says:

    AJC
    Come on you can come up with ideas cant you?
    How about a tax agreement with aussie to provide our share from that server?

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  10. Pete George (23,793 comments) says:

    Bil English said yesterday there is more tax “avoidance” from GST-less purchases from overseas than from multi-national minimisation of tax liability.

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  11. martinh (1,272 comments) says:

    Pete
    Two wrongs aint make a right do they?

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  12. nickb (3,696 comments) says:

    Comparing buying goods online with what facebook and apple are doing is laughable.

    Bill English has been losing the plot a bit lately. If they hadn’t raised GST, and addressed bracket creep, then maybe people would have more disposable incomes and wouldn’t have to buy offshore…

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  13. jp_1983 (236 comments) says:

    this gst thing on purchases overseas is crap

    1. the goods or service doesn’t originate in nz so dont call it that.

    if the govt./ labour wants to tax it call it what it really is an ‘import tariff’ and see how popular it is.

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  14. kiwi in america (2,314 comments) says:

    nickb
    The GST on overseas purchases is a red herring. NZers are buying offshore not to avoid the GST but to avail themselves of the vastly greater choice and substantially cheaper prices of a number of goods due to excessive NZ importer/distributer mark ups levied on kiwis for decades due to them controlling the supply. NZ residents can now circumvent those markups and the retailers are resorting to the time honoured tradition of trying to get a government to protect their market for them except National won’t play along. The levying of GST would barely dent this trend and then the retailers, importers and distributors would be bleating for a reintroduction of tariffs.

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  15. nickb (3,696 comments) says:

    Yes I agree completely KIA, great comment (as always).

    I was meaning I think it was bizarre for Bill English to paint mums and dads as tax avoiders for avoiding overpriced and understocked kiwi retailers with poor customer service.

    Who wouldn’t buy offshore?

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  16. davidp (3,585 comments) says:

    Are Labour campaigning to force Xero to pay their “fair share” of tax in a couple of hundred countries around the world? Xero might not have an office or staff in any of these countries, their developers are all in NZ, and their servers are presumably in the US. But if an accountant in Ethiopia or Paraguay signs up for the Xero service, then presumably Labour think Xero should be paying the Ethiopian and Paraguayan governments for the privilege.

    So Labour could end up essentially shutting down the export cloud services part of the NZ ICT industry. And banning Google, Facebook, and Apple from NZ. It’s like a policy to take NZ back to the pre-internet age.

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  17. martinh (1,272 comments) says:

    JP
    I buy a new toyota at Giltrap.
    That toyota didnt originate in NZ so you dont think i should pay gst on that too?

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  18. martinh (1,272 comments) says:

    KIA
    Yes i buy overseas to avoid get the middleman costs here,I dont do it specifically to avoid gst,
    But that doesnt mean its not right to add GST to the purchase price as with gst it is more a fair playing field.
    If you dont believe in gst then just come out and say it

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  19. nickb (3,696 comments) says:

    The fundamental issue is people who should and do know better (David Clark et al) complaining about tax paid as a proportion of turnover, and not taxable profit. There is obviously a risk of this striking a chord with people who don’t know better (i.e. the general public).

    It is seriously misleading and sinister to so blatantly use the wrong figures.

    By the Clark standard any Joe from Waitakere who has had a tough year in his building business and only broke even is a filty tax avoider.

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  20. dirtbag (22 comments) says:

    These Labour politicians are like petulant children, stamping their feet feet because they didn’t a big enough piece of cake!
    Just an observation but when I rolled into the Vodafone shop the other day and paid hundreds of clams for a new iPhone, a nice fat slice of that amount was GST! A form of tax if I’m not mistaken

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  21. martinh (1,272 comments) says:

    NickB
    What would you say are Google/Facebook costs here?
    Last time i looked i didnt see any towerblocks owned by them nor anyone i know here is employed by them.
    Only the google mapping streetcar comes to mind

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  22. davidp (3,585 comments) says:

    Here is Clare Curran promoting Apple products including iTunes via the official Labour Caucus blog:

    https://blog.labour.org.nz/2011/02/20/what-to-do-with-your-ipad/

    Note that she isn’t promoting generic tablet computers as a technology, but Apple products specifically.

    One minute you’re a Labour MPs shiny new toy. The next you’re exploiting the people of NZ.

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  23. Joanne (177 comments) says:

    Labour looks like it is announcing policy on the hoof. Cunliffe was on the back foot twice in one news bulletin yesterday. Clark looked serious about government being able to ban parts of the internet. Cunliffe looked bemused.

    They need solid policy with more than just ‘we are’. HOW.

    This is such an ignorant opposition.

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  24. redqueen (596 comments) says:

    What about we put a tax on political press releases, policy statements, ‘reports’, and interviews. If you think how much utter rubbish Labour and the Greens release, it would be nice to think they’re paying their fair share of wasting all of our time.

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  25. nickb (3,696 comments) says:

    But that doesnt mean its not right to add GST to the purchase price as with gst it is more a fair playing field.

    Then you have issues with customs staff having to open packages, sift through goods, call purchasers over small amounts of GST. There is currently a de minimis threshold of $00 value (I believe) below which GST is not charged.

    Are you going to hire customs staff to try and collect GST on a $50 pair of shoes? That’s around $7.50 of GST.

    I agree with KIA. To me this shrieks of a protection racket when NZ retailers should be a) broadening their range b) stop gouging people and c) stop hiring hordes of sullen young emos that don’t give the slightest fuck about assisting you or fixing or broken junk they sold you a week earlier.

    Just my opinion, and no I have never been involved in retail.

    I have bought shoes online for $90NZD that sell here for $300NZD. See it all the time. Books are probably the worst. You can get most from the Book Depository or similar for often half the price they sell for here. Funnily enough the last bookshop I went into the owner was raving about capitalists destroying the country, as he was selling hardbacks of Ricky Ponting’s autobiography for $75…

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  26. jp_1983 (236 comments) says:

    martinh (688 comments) says:
    January 30th, 2014 at 8:29 am
    JP
    I buy a new toyota at Giltrap.
    That toyota didnt originate in NZ so you dont think i should pay gst on that too?

    ———-
    No.

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  27. martinh (1,272 comments) says:

    JP
    Ok
    Seems you want Nz manufacturers/service providers to have a permanent 15% disadvantage. Our trading partners would really like you as Trade Minister

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  28. nickb (3,696 comments) says:

    What would you say are Google/Facebook costs here?

    Probably near zilch martin, but so is it’s revenue (700k odd).

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  29. martinh (1,272 comments) says:

    NickB
    Yes i would expect them to do it on any purchases $100 and over.
    Hold it untill $15<is deposited in an account.
    A customs officer could do say 5 of those an hour at the very least thats $75- well above there wages and would be more say if packages a $350 for example

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  30. martinh (1,272 comments) says:

    Nickb
    My mates small business would like to to earn $700,00 and pay $28k tax

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  31. nickb (3,696 comments) says:

    My mates small business would like to to earn $700,00 and pay $28k tax

    If you can’t see the difference between turnover and profit then there’s really no helping you.

    I will try and make it simple.

    1. TURNOVER/GROSS REVENUE – BUSINESS EXPENSES = PROFIT

    2. PROFIT X 28% = TAX TO PAY

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  32. OneTrack (3,350 comments) says:

    DPF – “Wow I didn’t know that there were NZ companies competing with Apple, Google and Facebook”

    Ah ha. But that’s because they haven’t announced, “KiwiPod” and “Koogle” yet. Somehow dime had already found out about KiwiBook.

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  33. martinh (1,272 comments) says:

    NickB
    I need to help you first- this is my question and your answer:

    “What would you say are Google/Facebook costs here?

    Probably near zilch martin, but so is it’s revenue (700k odd).”

    So they therefore have Profit of 700k odd as you say their costs a near zero.
    So how come they get a tax rate of 28000/700000?

    Your answer is out by a factor of about 7x or 700% Nickb

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  34. OneTrack (3,350 comments) says:

    nickb – “If you can’t see the difference between turnover and profit then there’s really no helping you. I will try and make it simple”

    tl;dr; for the inhabitants of the Labour party. If a company is making money, then they want it. If in doubt, they apply the “rich prick” rule.

    And, under Labour/Green, the tax rate will be 39%, 45%, 50% ……..

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  35. Manolo (14,166 comments) says:

    Give the stupid Parker not a beer but a double dose of castor oil.
    The failed businessman should keep his mouth shut. He’s an embarrasment to the nation.

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  36. martinh (1,272 comments) says:

    Ive got to go Nickb but if you need more help post a question and il answer it for you later.

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  37. Pete George (23,793 comments) says:

    Here’s what English said:

    Online spending erodes NZ tax base more than multinational avoidance – English

    The growing worldwide digital economy is putting pressure on New Zealand’s tax base, though online retail is a bigger threat than multinational avoidance, according to Finance Minister Bill English.

    New Zealand is part of a multilateral effort to clamp down on income shifting by the likes of web-based giants Google and Facebook, who have garnered international attention for their complicated tax structures, English told Parliament’s finance and expenditure committee.

    A bigger threat to New Zealand’s tax base is the increasing use of online retail spending, which avoids the country’s 15 percent goods and services tax, he said. What made both issues murky was that traditional jurisdictions were muddied by the questions over geographical and digital boundaries.

    “The most urgent issue is not the large end of town, it’s the small end of town, it’s hard-working mums and dads spending on the internet,” English told the committee.

    “We have to resolve both of those issues.”

    Resolving the issue doesn’t necessarily mean imposing GST on all overseas purchases. They could put the GST rate up to compensate for erosion of the tax take. But of course that makes NZ purchased goods even more expensive relatively so may push more to purchase from overseas.

    Or they could put up PAYE rates.

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  38. kiwi in america (2,314 comments) says:

    Martinh
    I refer you to a 4 July interview Radio NZ did with Customs Minister Maurice Williiamson on this issue and on the logistical hurdles that make collection of GST on small consumer on line purchases next to impossible without the unlikely co-operation of the offshore retailers or credit card companies.

    I repeat my question from earlier, if Labour were so concerned about the low amount of tax being paid in NZ by the likes of Google and Facebook then why did they do not a thing about it in the 9 years they were in office?

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  39. RightNow (7,014 comments) says:

    @martinh: if the tax paid at 28% = 28,000 then it’s pretty easy to work out their profit must have been $100k, which would mean their costs are $600k if their turnover is $700k.

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  40. jcuk (756 comments) says:

    I pay GST on my private imports when the Government tells me it is due and unfortunately get an extra tax by the gouging NZ handlers despite having paid an outlandish fee for the actual transportation to NZ.
    Another beef … it takes one or two days to travel half way around the workld and then several days from Auckland to Dunedin.

    I don’t pay GST on some of my imports becuase the government believes the collection is unecconomic.
    I import privately becuase I know my local bricks and mortar store is incapable of doing this with any efficiency and speed.

    Awhile back I wanted an item so wishing to support my local store I asked them if they could source it for me …. three weeks later they told me it was not available in NZ …. on receipt of that infor I went on the web and five minuites later had purchased the item and that day it was on its way to me. Such is the stupidity of the NZ storekeeper.

    If I was in business I would say yes I can get it for you and it will cost $x … the price of me going on the web and importing it and then adding my cut and GST to my expenses… if the customer was prepared to pay that I have made a sale and helped my business.

    Interestingly the sales person mentioned it would probably be cheaper to make a private import. So why do they not do something about it as I suggest in my previous paragraph?

    I think I am probably a better capitalist than them wanting the government to loose money by GSTing small items.

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  41. Pete George (23,793 comments) says:

    Ah ha. But that’s because they haven’t announced, “KiwiPod” and “Koogle” yet. Somehow dime had already found out about KiwiBook.

    Clark and Curran should put together a plan to manufacture KiwiPods at Hillside Workshops. The scale is a bit smaller than trains but it’s essential things are made here rather than in China.

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  42. davidp (3,585 comments) says:

    OneTrack>If a company is making money, then they want it.

    If a company is losing money then they want that too. It gives them something they can subsidise and a plaything they can manage. Think of all the legacy businesses that Labour love to keep going: KiwiRail, KiwiBank, TVNZ, and Solid Energy.

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  43. dime (10,212 comments) says:

    dirtbag – im not sure kiwibog is ready for two of us! the entire system could come crashing down…

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  44. jcuk (756 comments) says:

    I would suggest that the average Kiwi cost the government more than the o’seas companies with their love of the back-hander or paying in cash with no questions asked.
    But politicians thrive on appealing to peoples jealousy that somebody might be getting a freebie …. it is and has been for decades the basis of bene-bashing so often seen everywhere in NZ society.

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  45. nickb (3,696 comments) says:

    @martinh: if the tax paid at 28% = 28,000 then it’s pretty easy to work out their profit must have been $100k, which would mean their costs are $600k if their turnover is $700k.

    Finally… thankyou

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  46. anticorruptionnz (215 comments) says:

    This is so funny

    I have been looking at the background of the 1% who control NZ

    There are a few people who are the nearest and dearest advisers to both labour and National Governments these people have very close ties with the business round table now called the NZ institute .

    Perhaps we need to look a bit closer at these people rather than looking overseas .

    the sums lost in tax by Joe Bloggs buying over the internet is but a drop in the ocean compared to the tax breaks/ avoidance brought about by or at the hands of those who tell Government to tax the little guy more .

    see http://www.transparency.net.nz/wp-content/uploads/2014/01/TOP-SECRET-INVITATION-LIST-WIDENS-BUSINESS-GOVERNMENT-CHASM.pdf

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  47. nickb (3,696 comments) says:

    Your answer is out by a factor of about 7x or 700% Nickb

    Costs of 600k are near zilch for such a large company and in comparison to the near zilch turnover.

    As someone above pointed out.

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  48. Akld Commercial Lawyer (166 comments) says:

    There appear to be two issues here. First, I expect that pressure from within the IT sector may combine with multilateral efforts by a number of countries to deal with businesses that channel their earnings throw low-tax jurisdictions. The IT sector initiative can be demonstrated by brands such as IBM which are being quite open about the size and scale of their NZ footprint (and how much PAYE and GST they pay) when pitching for Govt contracts. Local IT businesses are doing the same – and saying to the Govt that they should asses tenders on a level playing field basis – so that they assess the tender not just on price but also the value-add for NZ.

    On GST, NZ and Oz both appear to be worried about the same issue. It seems to be less a matter of buying the odd book or pair of shoes – and more about business buying patterns. Already there is much anecdotal evidence (mostly from Oz) about businesses setting up in (say) the US to break down shipments of trade tools into smaller packages – under the GST threshold. This has an impact not just on the GST revenue – but also the entire value and support chain. As a result, the local service agency may get to a point where they do not provide service and support for items where the owner cannot demonstrate that they were purchased through an approved supply chain.

    Clearly the internet is changing the way people do business, but for items that require regular servicing, a local service agent may find it uneconomic to hire and train often highly skilled staff – if all they are doing is servicing items bought under the counter somewhere else. Already some big brands are trying to manage this evolution by requiring orders in NZ to placed only through the local agent – who may not carry any stock in NZ. The goods are then shipped by the brand to the local agent who carries out any set up – but also ensures that the manufacturer’s warranty process is addressed.

    These sorts of processes are likely to take time to evolve and might mean a price to the customer that is a bit higher than some parallel imports but lower than might be the case if the local agent had to keep stock in NZ. And the customer has the comfort that they have coverage by a service and warranty package. The IRD also gets its GST. They probably won’t ever extend to small goods (e.g. books) aimed solely at the retail customer.

    NZ is by no means alone in having to wrestle with the changes brought about by the internet – but the flurry of Labour press releases suggest that the caucus still suffers from the same “ready, fire, aim” problems evidenced when the last leader was in the chair. We need a better Opposition.

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  49. martinh (1,272 comments) says:

    KIA
    Perhaps you can summarise for us what Maurice said was too hard for him to achieve?

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  50. martinh (1,272 comments) says:

    RIghtnow
    You really think their revenue was $700000?
    When i go on facebook or google im pounded with nz based adverts.
    These companies which have a bigger footprint in NZ lives than most other companies are saying they have a turnover and cost here less than that of the local street corner KFC restaurant.
    So seems they a doing like Apple and taking revenue untaxed offshore dont a think?
    And as for my equation with NickB that was based on what he said about quote “zilch” zero costs, not $600,000 costs- whatever they are.

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  51. martinh (1,272 comments) says:

    Nick B
    You say this

    Costs of 600k are near zilch for such a large company and in comparison to the near zilch turnover.

    As someone above pointed out.”

    Do you really think they have near zilch revenue gathered from NZ, considering their massive on line advertising presence for starters and also for example revenue they take from people clicking on their links?

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  52. nickb (3,696 comments) says:

    So now you are not only saying they are not paying enough tax based on your arbitrary view of “fair share”, they are also committing criminal tax evasion by not even declaring revenue? And that their financial statements are fraudulent & false?

    That seems to be what you are implying. Pretty serious accusation?

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  53. martinh (1,272 comments) says:

    NickB.
    No im not im just commenting on the above comment that Apple takes its revenue to aussie and only pays tax there.

    Its nothing to do with fair share.
    You still didnt answer my question about whether you think they only get $700k revenue from all NZ consumers/businesses? (Ps for illustration my neighbouring offices web designing company itself collects much more than that)

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  54. nickb (3,696 comments) says:

    I’ve got no idea whatsoever, I’m not Apple’s NZ auditors?

    Surely if that’s what is in their financial statements it should be accepted as being correct?

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  55. martinh (1,272 comments) says:

    NickB
    Well it doesnt pass my smell test

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  56. jp_1983 (236 comments) says:

    martinh (698 comments) says:
    January 30th, 2014 at 8:47 am
    JP
    Ok
    Seems you want Nz manufacturers/service providers to have a permanent 15% disadvantage. Our trading partners would really like you as Trade Minister

    —–
    Ultimately I wouldn’t have GST if I had the ability to implement it.

    Flat income tax and that is it.

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  57. martinh (1,272 comments) says:

    Facebook has just announced a 63% increase in revenue on STRONG AD SALES.

    Definitely fishy

    http://www.bbc.co.uk/news/business-25954825

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  58. martinh (1,272 comments) says:

    Jp
    Fair enough, but i dont think its fair to disadvantage locals against overseas based vendors while we still have gst

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  59. RightNow (7,014 comments) says:

    martinh:
    “RIghtnow
    You really think their revenue was $700000?”
    I was simply commenting about the math. I do know that Microsoft moved their international HQ to Singapore a few years ago to minimise tax obligations. Much of the revenue depends where it is invoiced from.

    “And as for my equation with NickB that was based on what he said about quote “zilch” zero costs, not $600,000 costs- whatever they are.”
    He also said their revenue, at $700,000, was ‘near zilch’. So if $700k can be ‘near zilch’ then $600k is even nearer.

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  60. jp_1983 (236 comments) says:

    Well in a way this whole argument is a moot point.

    When Helen Clark becomes the head of the United Nations, we will have a one world government and we will pay all our our taxes to them and they will decide how we will spend our money.
    Then this whole GST, pay fair share etc.. will seem small fry.

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  61. martinh (1,272 comments) says:

    RightNow.
    Well id like to see moves done which stop the tax take from NZ reducing if these companies move their offshore offices to somewhere they think will reduce the tax take from here.

    You mention about origin of invoice, well any company that has over $50k of invoice a year to a NZ address for example should be made to have a NZ invoice address

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  62. itstricky (2,021 comments) says:

    Anyway the next time you see a Labour MP using an iPhone or iPad or Apple laptop, make sure you tell them off for using an evil company that plunders the NZ economy.

    You’re being completely disingenious, overbearingly bemused and sanctimonious Mr Farrar. Not sure I can dream up any other nouns that fit.

    When will you author a post on this subject that actually has some sensible options, seeing as the Labour ones are “crap” in your opinion?

    It seems far easier for you to do the politiking thing and bang on about Labour than it is to come up with solutions. I mean even Bill English suggests he thinks it’s a problem, just that he doesn’t have anything up his sleeve. I tire of reading boresome Labour bashing articles that are nothing but vehicles for your ore ideologically minded posters to get their rocks off over.

    Give us some ideas on interesting ideas on alternatives. Like the post by Akl Commercial Lawyer above, or some of the other genuine ones. You should take clue from this that even you hardened ideologically minded posters have had enough.

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  63. jp_1983 (236 comments) says:

    martinh (702 comments) says:
    January 30th, 2014 at 10:46 am
    Jp
    Fair enough, but i dont think its fair to disadvantage locals against overseas based vendors while we still have gst


    So if I go to Australia for a holiday and buy some ‘goods’ and bring them back to NZ should I be made to pay a 15% at the border?
    If not, what is the difference if I sit on my laptop and buy the same goods?

    What if I give money to my Aussie friend from NZ and he buys the same goods and sends it to NZ for me?

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  64. Tauhei Notts (1,687 comments) says:

    So, Google, Apple and Facebook are paying very little New Zealand income tax.
    Can anybody tell me how much New Zealand income tax Fonterra paid last year?
    I never ever managed to get a copy of their full 2013 annual report, but I recall the credits to their Imputation Credit Account in their 2012 Annual report were exactly zero.

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  65. martinh (1,272 comments) says:

    Jp
    If you want to spend that on airfares thats fine.
    Customs deals with incoming goods on NZer passengers currently.
    If you get your Aussie friend to buy it for you then i dont think it will be that much cheaper as they have similar priced goods to here.
    They would have to abide by aussie importing rules and you would also have to pay foreign currency exchange fee and so would he on top of that if he then bought them from a different currency.
    Also if customs intercepted the goods and they looked new they could follow up on that and place your name on a watch list thus insuring you cant become a recidivist

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  66. kiwi in america (2,314 comments) says:

    Itstricky
    Labour had 9 years to address this issue and did zero zip nada nothing. Perhaps you’d care to speculate as to why?

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  67. dime (10,212 comments) says:

    No one tell labour this! Facebook just reported earnings:

    “In total, the outfit earned $2.59 billion in revenue during Q4 of 2013.” (imagine 28% of revenue! the DPB would be $1000 a week! all the kids would be geniuses).

    Net income was 523 million.

    Net income as a % of revenue was…. 20% :O

    So if they made 700k in NZ and paid 100k tax, thats only 14% :O :O :O those fuckers!!!!

    BUT THERES MORE!!

    This time last year they did 1.6 billion for a 50 mill net profit.. thats like 3%…

    I think they overpaid their taxes in NZ last year

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  68. martinh (1,272 comments) says:

    Dime
    What was their yearly revenue?

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  69. martinh (1,272 comments) says:

    Dime i cant be bothered waiting so since Q4 was $2.59 billion in revenue lets assume yearly revenue is a very conservative $6billion.
    That is 6,000,000,000
    Do you really think NZ contributed only $700,000 in revenue to that total?
    Ie this booming western OECD economy provided only 0.00011666666 of their total revenue?

    Come on DIme/NickB please say you think thats true, go on please, just once say it please….

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  70. Right of way is Way of Right (883 comments) says:

    So, a policy is out, and 24 hours later, it’s gone. I beleive when a National Party Leader does that, it’s called a flip-flop. So what doe we call it when a Labour Party Leader does it? Hmm. I guess there’s no name for it, because it’s normal?

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  71. martinh (1,272 comments) says:

    Please please say it please please please dont keep us all waiting

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  72. kiwi in america (2,314 comments) says:

    Martinh
    The gist of what Williamson said in this and other media interviews was that Customs officials looked at the logistics of collecting the GST on imported goods ordered over the internet and found that the government would raise as much as it spent collecting it (the necessity to build or rent warehouse space to store the goods, the additionally staff to inspect and collect the tax and the additional IT costs to add the capability). The only cost effective way was to get overseas retailers to be the NZ government’s tax collector – the likelihood of Amazon for example agreeing to that is remote.

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  73. dime (10,212 comments) says:

    Martin – i think it was about 6 billion last year.

    Lets do some more maths..

    980 million users. NZ has 2 million.

    So we make up .2% of their business.

    so thats about 12 million?

    So at that 3% return on revenue number.. they should have paid about 36 grand.

    Thats assuming that they make the same amount of money in POOR new zealand as they do in the rich countries.

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  74. itstricky (2,021 comments) says:

    Labour had 9 years to address this issue and did zero zip nada nothing. Perhaps you’d care to speculate as to why?

    What? Price of fish? Who? Where? Do I care? Why? – I’ll give you a clue, I don’t. No wait a minute, you’re one of those ideologically minded posters aren’t you – the ones who can’t debate the actual issues and would far rather bang on about the opposition.

    But, just to amuse – Labour were in power from 1999 – 2008. International Internet pipes into NZ came in around 1994-1995 but were not of sufficient size and purpose to become actually useable by commerce (in fact no one had twigged that this was the new frontier) until around 1999-2000 eCommerce (as it was called in the day) didn’t become common place in the IT world until 2000-2002. Broadband in NZ (which was an enabler for *real* volumes of Internet commerce aimed at average Joes) didn’t become available until 2003 and it became more common place from 2004 onwards. I would hazard a small guess that there are lots of emergent quirks and problems with the globally reaching Internet based economy – not ones that “Labour should have sorted out 9 years ago” and they are things that Governments around the world should be thinking about. Not here though, it’s all about election year bashing. Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz…

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  75. martinh (1,272 comments) says:

    KIA
    Thats what i thought would be what he said.
    So customs is inefficient and Williams doesnt have the balls to question/fix that.
    The other option is that they dont think itd be politically a good move to do.

    Im hoping its actually option two and theyl change that after defeating Cunliffe in a few months

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  76. dime (10,212 comments) says:

    Its funny how politicians can get people all wound up about potential loss of taxes…

    The DPB costs us what? 45 millions a week? no biggie. If we could just get that extra few million from facebook that they arent legally required to pay, we would all be set!

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  77. nickb (3,696 comments) says:

    Martin, I’ve got no idea. Like I’ve said before, I’m not facebook’s auditor, nor do I have an intimate knowledge of their global business structure.

    There’s no doubt Google, Amazon, Facebook etc get up to very aggressive transfer pricing and use tax havens in other parts of the world. My posts on this thread have been more about the complete and utter ineptness and stupidity of people, including shadow cabinet ministers, confusing (deliberately or otherwise) revenue with profit. It is just appallingly bad.

    This is putting aside the fact Labour are holding out these companies as gold mines for IRD when NZ revenue of Facebook in 2013 is only $700,000. NZ’s black economy and lost tax revenue from tax evasion (your friendly builder offering you a cashie etc) is estimated at close to $10b.

    So whilst Facebook may well be cheating countries out of tax revenue where Facebook actually has a physical presence there and makes lots of money in those countries, little old NZ would be far better served tidying up its own backyard first before wanting to arbitrarily grab a bigger share of 700k based on the ubiquitous “fair share” principle…I know individuals who earn more than that in a year

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  78. martinh (1,272 comments) says:

    Dime
    Thanks for that
    12million yet you said their costs last year were $600000
    So tax should of being $3,192,000

    Thanks for proving my point to you.
    Im sure you will feel aggrieved for all the other business owners out there around NZ who dont pay that same business tax rate calculated here and you will now be screaming out loudly to fix this inequity

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  79. nickb (3,696 comments) says:

    dime – well done. Although I think you mean 360k?

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  80. kiwi in america (2,314 comments) says:

    Itstricky
    When the left espouse their ideology it’s just common sense isn’t it old chap – no there’s not an ideological bone in your body.

    Your little rant about the internet has nothing to do with the question of why Labour failed to tackle the low tax it now says Apple, Google and Facebook paid in New Zealand. I don’t know when Mac computers became available in NZ but I’m sure it was prior to 1999. Plenty of multi nationals have operated in NZ probably not paying their ‘fair share’ according to the left during the entire time Labour had the treasury benches – Google and Facebook are just the latest very public flavour of the month for their demagoguery. My point is that Labour had the chance to address the issue of the underpayment of tax (as they see it) by multi national companies in NZ for 9 years and did virtually nothing. It’s precious indeed pathetic to witness their Luddite attempts to address the issue now and they are rightly being pilloried for allowing a finance spokesperson to propose to shut down Facebook.

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  81. dime (10,212 comments) says:

    nick – probably! Dime gets confused when there are so many zeros! its above my pay grade :)

    martin – as i said. that is based on NZ generating the same amount of revenue/profit as everywhere else in the world… as nick says, of course they shuffle things around.

    My point – even if they didnt, i dont think they are some giant cash cow for the IRD.

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  82. martinh (1,272 comments) says:

    NickB
    I take your point.
    I think we should be going after both, thats why we pay these IRD beaurecrats so much a year in our taxes anyway i thought

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  83. nickb (3,696 comments) says:

    Dime
    Thanks for that
    12million yet you said their costs last year were $600000
    So tax should of being $3,192,000

    Thanks for proving my point to you.
    Im sure you will feel aggrieved for all the other business owners out there around NZ who dont pay that same business tax rate calculated here and you will now be screaming out loudly to fix this inequity

    There are obviously far more variables than the global revenue / % of users calculation that dime did. It would be logical to think that NZ advertising is not as proportionately lucrative in NZ due to our tiny market.

    And are you saying categorically that you have NEVER:

    a)

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  84. kiwi in america (2,314 comments) says:

    martinh
    There’s nothing inefficient about it. If a small government department has to gear up to intercept, hold, examine, collect tax and release hundreds of thousands of small packages of consumer goods ordered online by NZ residents no matter how efficient or otherwise they are, they are going to have cover the rent/buy the space and hire the staff. Neutral non political officials are the ones who said that those costs would almost cancel out the extra GST collected. It’s not rocket science.

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  85. nickb (3,696 comments) says:

    Dime
    Thanks for that
    12million yet you said their costs last year were $600000
    So tax should of being $3,192,000

    Thanks for proving my point to you.
    Im sure you will feel aggrieved for all the other business owners out there around NZ who dont pay that same business tax rate calculated here and you will now be screaming out loudly to fix this inequity

    There are obviously far more variables than the global revenue / % of users calculation that dime did. It would be logical to think that NZ advertising is not as proportionately lucrative in NZ due to our tiny market.

    And are you saying categorically that you have NEVER:

    a) Offered a cashie
    b) Accepted a cashie from a tradesperson
    c) Owned property which you sold for a capital gain
    d) Had a family trust
    e) Had a PIE kiwisaver account
    f) Been self employed and not declared income or claimed for something you knew was personal related?

    All of those are equal to or worse than anything facebook is doing in NZ.

    EDIT: don’t know why comment doubled up

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  86. dime (10,212 comments) says:

    “There are obviously far more variables than the global revenue / % of users calculation that dime did.”

    How dare you!

    HAHA

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  87. martinh (1,272 comments) says:

    KIA
    well considering the revenue i hear they are missing out on is well over a hundred million dollars per year, i would like to see what sort of warehouse and what sort of hourly rate they are going to be paying staff to come up with costs that high.

    Perhaps instead of a warehouse in all those empty lots in the industrial estate around the airport Maurice accepted costings which indicated they needed have a warehouse in the middle of Queen Street with gold pated and diamond fittings.
    Really, you can come up with costs of over $100,000,000 a year?

    I use to work for a company out at CHCH airport. The rent was $150000 and the space was huge,

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  88. RightNow (7,014 comments) says:

    I think there’s probably some confusion about revenues for Facebook and Google. The $700k figure nickb originally stated may not be the actual figure for either, and I initially thought martinh was referring to it being revenue for Google revenue as he referred to their street mapping cars.
    A NZ Herald article from 2012 quotes revenue of about $4.5 million for Google that year.

    He said Google New Zealand was also “funnelling revenue” through its low-tax Irish counterpart, paying only $109,038 tax on $4,447,898 in revenue last year.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10850796

    Another NZ Herald article seems to have the (approx)$700k figure for Facebook, but explains costs including wages contributed to a net loss – and the $28k tax paid figure.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10892856

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  89. nickb (3,696 comments) says:

    Haha it’d be a bit tough to work that out and include that in your calcs…but your point was good

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  90. itstricky (2,021 comments) says:

    When the left espouse their ideology it’s just common sense isn’t it old chap

    Ah, I see, the old human beings are different based on their political beliefs and those on the right have all the morals & common sense malakey. Newsflash – there *IS* no difference between humans. They’re all the same. We’re all the same. We all act in self interest some times. To suggest that any one group act differently and that any other group is morally superior is just bollocks and indicative of how far down the narrow eyed ideological tunnel you are. Too long in America?

    I don’t know when Mac computers became available in NZ but I’m sure it was prior to 1999

    Okay, this was about The Internet. But seeing as you made it not, I’ll tell you emphatically that you could buy Macs in NZ in the early 90’s and probably some of the earlier pre-Mac models such as the Lisa or II and probably even the original Mac in the late 80’s. So, if this is the line that we’re peddling – why didn’t the National Government of 90-99 see this coming and do something about, or indeed why didn’t the Labour Government of 84-90 look in their crystal ball and see it… etc etc etc blah blah blah…

    Again, so far far far down the dark ideological tunnel that you believe that all the worlds problems belong to one group of people and another on their sparkling silver horses are coming in to save the day…

    Anyway, back to point, once again tired of Farrar’s boring bash Labour posts. Give us some substance.

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  91. martinh (1,272 comments) says:

    NickB
    No of course not, you can incriminate yourself if you want

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  92. martinh (1,272 comments) says:

    RIght Now
    Thanks for those articles.
    I concur with this statement in there:
    “All of the revenue came from Facebook Ireland under a service agreement and is unlikely to reflect the ultimate parent Facebook’s advertising sales in New Zealand.”

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  93. davidp (3,585 comments) says:

    So it is lunch time and I’ve just checked out UK news site The Register. There is an advertisement on the homepage for NZ Lotto.

    I bet The Register don’t pay NZ tax. Parker needs to get on to them to ensure they pay their “fair share”. Maybe Clark can threaten them with a ban too.

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  94. RightNow (7,014 comments) says:

    martinh – since Ireland went full tilt in the late 90’s to attract foreign companies with low company tax rates in the late 90’s (Celtic Tiger) a lot of multinationals headquartered there.

    Lawyers and accountants, that’s all I’ve got to say about it.

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  95. martinh (1,272 comments) says:

    Davidp
    I get that the whole time too. Im pretty sure those ads are provided by google on to the Register website as the website knows its from a NZ ISP.
    Register would pay tax on the income they receive from Google for placing the ads, in the UK.
    Google should be declaring the revenue as NZ revenue for providing those adverts from its NZ advertising purchasers.
    As you have shown, googlenz is everywhere

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  96. martinh (1,272 comments) says:

    Right now.
    Interesting that their economy is still really shit despite all that.
    I wish that plageurising Irish leprecaun Noelle McCarthy who talks with the most annoying accentuated accent on RadioNZ would go back there, shes a drain on everyone here including taxpayer funded radio.

    No wonder their economy sucks if their labour force has a genetic/cultural/personal character background like her

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  97. RightNow (7,014 comments) says:

    martinh, I understand their economy had a boom and then a bust.

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  98. martinh (1,272 comments) says:

    Yep, i know someone who bought an apartment in the boom
    400k euro, its now worth $230.
    no wonder they drink, gloomy weather i hear too.
    They still dont deserve our revenue untaxed

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  99. OneTrack (3,350 comments) says:

    itstricky – “Ah, I see, the old human beings are different based on their political beliefs and those on the right have all the morals & common sense malakey. Newsflash – there *IS* no difference between humans”

    Unless its hard-left wingers talking about the evil capitalists and “neolibs” who only want to employ slaves, pay them $1 an hour, eat their young, give money to their rich mates, blah, blah, etc., etc. :-)

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  100. queenstfarmer (782 comments) says:

    @martinh: “Interesting that their economy is still really shit despite all that.”

    You’re a bit out of date there.

    Ireland’s economy is set to be one of the euro zone’s brightest lights this year and next…

    Growth in Ireland will outpace the wider euro zone in 2014 and 2015 as the country’s economic reforms pay off, according to the poll of nearly 50 economists and strategists…

    http://www.rte.ie/news/business/2014/0122/499445-economy-poll/

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  101. martinh (1,272 comments) says:

    QueenstFarmer
    Pleased to hear that, hopefully Noelle will bugger back off there then and we will find a way to stop all these large companies Facebook/Google etc using our revenue to boost their economy instead of ours.

    I wonder if a housing boom will happen again- probably inevitable

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  102. martinh (1,272 comments) says:

    Thats only a 2% growth forecast for Ireland so considering they went back a long way over the recession they still a rather a basket case much like Noelle

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  103. queenstfarmer (782 comments) says:

    @martinh: “we will find a way to stop all these large companies Facebook/Google etc using our revenue to boost their economy instead of ours”

    What a bizzare view. No-one is forcing NZ businesses to buy services from Facebook or Google. They choose to do so because they see it as benefiting their business. Do you want to ban NZ businesses from choosing to buy services from FB and Google just because it also “boosts” another economy? If so, then you must want to ban all international trade.

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  104. kiwi in america (2,314 comments) says:

    Itstricky
    I’ll put you out of your misery – the answer is: it’s tricky if you excuse the pun. To the extent that transfer pricing is the culprit you need to get every first world’s tax authority AND a few if the major tax havens on board to make anything with teeth stick. The likelihood of success – near zero hence Cullen not even bringing any substantive amendments to the Income Tax Act to address it.

    If Clark or Parker announced they would set up a task force to work with our major trading partners on this issue you’d at least be able to say that Labour were trying to deal with the issue pragmatically but Parker and Clark indulged in cheap meaningless demagoguery proposing nutty solutions with zero chance of success (and then eventually knocked on the head by a smirking Cunliffe). It’s like shooting fish in a barrel as Key and co found out in Parliamentary question time yesterday.

    If you voted for Cunliffe in the primary you’d be suffering from some buyers remorse right now.

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  105. Pete George (23,793 comments) says:

    But it looks like Cunliffe is only a part of much bigger party and caucus problems. Too much inequality between them and common sense.

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  106. martinh (1,272 comments) says:

    Queenstfarmer
    No, what im saying is why is our revenue bosting Irelands economy instead of ours, what the hell is Ireland all the way over there able to take a slice of the pie for?

    The companys HQ is in Menlo Park USA
    What im saying is stop this bullshit Middle man tax rort like Facebook Ireland is doing which is minimising money being kept in Nz.
    Comprehend?

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  107. martinh (1,272 comments) says:

    QueenstfarmerIf you a happy for facebook to set up this facebook ireland system so they can undercut people trying to sell advertising places on their own websites here then just admit that.
    If you want a foreign company to have an unfair advantage over local ones by channelling it through a Irish entity so it doesnt have to pay tax as much here per $earned as other companies then thats your opinion Queensstfarmer but i think thats unfair.

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  108. queenstfarmer (782 comments) says:

    @martinh: “what im saying is why is our revenue bosting Irelands economy instead of ours” – so you are against all imported goods then, are you? Perhaps ban all cars because that boosts America and Japan. You’d have to ban oil imports too, and electronics, etc.

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  109. itstricky (2,021 comments) says:

    OneTrack – quite right – ;-) one giant up tick for you ;-) them there nut bar lefties as well. So you must give Norman credit for calling it out as ridiculous.

    KIA what’s this? Some intelligent consideration of the issue at hand? Of course it’s tricky but NZ will become a back water in the global swimming pool if it ain’t addressed. You are otherwise right – Parker opened his gob before brain engaged but an extreme measure like that is technically possible just not socially acceptable. And it is problem not unique to this country. So where to from here?

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  110. martinh (1,272 comments) says:

    No Queenstfarmer, you miss the point.

    Im against ireland being used as a middleman to gather the revenue so less tax is gathered than if it was a NZ company.
    When i buy a car or part from NZ its invoiced from Toyota NZ not Toyota Ireland. For starters its inequitable to NZ companies trying to provide spaces for advertising.
    Do you Queenstfarmer not comprehend that yet?
    If not then please dont reply as I dont want to be in fits and giggles at you while trying to work

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  111. queenstfarmer (782 comments) says:

    @martinh: no I don’t comprehend what you are saying, because it makes no sense!

    Actually, you are perfectly able to buy cars from overseas if you want. I’m sure a Toyota dealership in Ireland would be more than happy to sell you a car and ship it over. I’ve got a mate who buys classic cars (doer-uppers) from all over the world. I suppose you would ban this practice…

    But of course most people don’t, because there are disadvantages in dealing with a foreign outfit, e.g. harder to enforce warranties, shipping costs etc. With online services, those disadvantages are often removed – online advertising being a classic example.

    Sounds like you are just railing against the modern world, my friend. Better get used to it!

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  112. martinh (1,272 comments) says:

    Queenstfarmer.
    You try importing a new car cheaper than Toyota sells them for with full warranty and il eat my slippers
    No i wouldnt ban your mate doing that as im supposing those cars arent brand new but if they were brand new ferrais for instance i would safely assume he would be paying tax and a bloody amazing lot of it in Italy.

    I agree that those disadvantages are often removed on line so thus its practice is growing AND as such there is a tax loophole here for online advertisers; it puts locals at a disadvantage. I think it needs to be stopped, that wouldnt affect your mate getting his cars he admires.

    Yes i am ralliing against it as otherwise online companies will end up locating their systems to foreign companies that charge the least so itl be a rush to the bottom and i still believe their are valid reasons to protect our taxbase.
    You seem to want to give Facebook for example an advantage over NZ firms so thats your call, not mine

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  113. Brian Smaller (3,966 comments) says:

    Awhile back I wanted an item so wishing to support my local store I asked them if they could source it for me …. three weeks later they told me it was not available in NZ …. on receipt of that infor I went on the web and five minuites later had purchased the item and that day it was on its way to me. Such is the stupidity of the NZ storekeeper.

    I saw a book in a model shop I wanted. Price $110. Online it cost me $20 and free postage from the UK. I asked the storekeeper why he didn’t buy them from the same source and just whack a mark up on them and sell them for say, $40. I probably would have supported his store at that price. He said “we go through distributors”. I seriously don’t think a lot of these guys get it. The store is shut down now.

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  114. queenstfarmer (782 comments) says:

    @martinh: “You try importing a new car cheaper than Toyota sells them for with full warranty and il eat my slippers”

    I don’t know about new cars, but it’s quite common with used cars. It’s called parallel importing (I trust you’ve heard of that?). Most Japanese second-hand cars are parallel imported into NZ.

    Also common with phones, appliances, etc. And under the Consumer Guarantees Act everyone gets the same statutory warranties.

    So I’m not sure how this supports your argument in any way.

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  115. martinh (1,272 comments) says:

    Queenstfarmer
    Used cars arent parallel importing
    Say you bought a new Samsung in HongKong, you need to send that back to HK to get it fixed. Samsung NZ will have nothing to do with it and fair enough.
    And if you are a NZ company importing you would be paying tax here My man

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  116. queenstfarmer (782 comments) says:

    “Used cars arent parallel importing” – ??? Yes they are.

    “Say you bought a new Samsung in HongKong, you need to send that back to HK to get it fixed. Samsung NZ will have nothing to do with it and fair enough” – that depends on the warranty. Some companies do have worldwide policies. By coincidence, I actually have an Acer laptop bought in HK that comes with a global warranty that provides a replacement in NZ. So again, what does this have to do with FB and how does this support your argument?

    “if you are a NZ company importing you would be paying tax here” – only if they are making a taxable profit. Who suggested otherwise? Again, how does any of this help your argument?

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  117. martinh (1,272 comments) says:

    A used toyota is not a parallel import with a new toyota.
    “Again, how does any of this help your argument?”
    My argument is that if you are using a foreign base to base your invoicing on to avoid stating it in your NZ subsidary then up yours and i want to see that stopped.
    If you want to see all companies start their own equivalent of Facebook Ireland so our tax base gets decimated and goes to those irish pissheads then thats your opinion but its not mine, have some pride in your country man

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  118. martinh (1,272 comments) says:

    Gees finally he gets it, no wonder Facebook does this and gets away with it with the suits on Queen St with the thinking like this chap

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  119. queenstfarmer (782 comments) says:

    @martinh, I think you are conflating several things.

    1. The “Facebook model” is hardly new – it’s how multinationals have operated for decades and it’s a normal part of international trade whether you like it or not.

    2. The concern you seem to be expressing (albeit rather imprecisely) is to do with transfer pricing (google it). This is not strictly a multinational company issue, but it is a notoriously difficult area, and there are very detailed rules and laws around this – which have been around for decades. There is no question that some companies rort the transfer pricing schemes to extract tax-free revenue, but the IRD can and does investigate. But it is tricky.

    3. The issue has always been around, but until the digitial economy really took off it wasn’t so visible. Now, there are billions of dollars flowing around in 1’s and 0’s and that does put it on everyone’s radar and raise legitimate questions.

    But railing against Facebook for obtaining a “benefit” by operating in a completely lawful, established way that literally thousands of companies have for decades (including to NZ’s great advantage), is silly.

    The point that DPF has always made is: OK, you don’t like it that Facebook can earn so much money without paying some to the NZ Govt. What is your solution then. Labour’s revenue spokesman said he would consider banning Facebook. Do you have any better ideas? If you can find a way to make foreign companies pay the NZ Govt vast sums of money with no downside, I’m all ears!

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  120. martinh (1,272 comments) says:

    QstFarmer
    How about making that any nz adverts have to be invoiced by their NZ subsidary not their Ireland one?

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  121. queenstfarmer (782 comments) says:

    @martinh: but how would you enforce that? You would need to make it illegal for NZ business to advertise with Facebook or Google directly unless through a NZ subsidiary. Which (a) is a pretty outrageous attack on commerce, (b) probably breachs a bunch of free trade & tax agreements etc, (c) would pretty much mean preventing NZ businesses from advertising online, and (d) even then doesn’t necessarily mean the local subsidiary pays any more tax.

    And why just stop with online advertising? What about buying iTunes – would you make it illegal for me to buy & download a song off the iTunes store unless Apple invoiced me in NZ? And how would you enforce that?

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  122. Pete George (23,793 comments) says:

    queenstfarmer – yes. Davids Clark and Parker have for some time now been trying to score points/votes by depicting multinationals as nasty and unfairly avoiding tax, but they both keep showing a lack of basic understanding and the only suggestions they have made have been crazy or unrealistic.

    It looks shoddy.

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  123. martinh (1,272 comments) says:

    No i would make it illegal for Facebook Google and Apple etc etc, im man enough to stand by that.
    As The man said before when he went to the UK website they knew to put NZ ads on him.
    Hiding behind an “internet dimension” is girls play, they know what they are doing and i would stop it with my above tax rule. If they wanted to not pay then i would chase them for tax avoidance.
    The NZ companies wouldnt be able to claim an offshore company as a legitimate expense either

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  124. queenstfarmer (782 comments) says:

    @martinh, some questions about your “tax rule” (basically the disowned Labour “ban Facebook” plan):

    1. Would your law specifically target Facebook, Google and Apple, or any foreign-owned company that doesn’t pay any (or enough, in your view) tax in NZ? E.g. would you also make the NZ Herald illegal because it pays virtually no tax. Foreign airline bookings?

    2. How would you enforce this law against these foreign entities, any more than if NZ passed a law saying everyone in France has to pay a 10% tax to the NZ Govt?

    3. How would you assess the correct amount of tax against these foreign entities? Or would you just make them pay what you think is “fair” from time to time?

    4. Would you be OK when foreign countries impose a reciprocal tax on NZ companies, e.g. Xero, one of our brightest prospects? You realise this would pretty much kill the tech startup industry in NZ and severely hamper investment.

    5. Would you be prepared to take the risk that Google, Facebook, etc might simply block off NZ users rather than risk breaking the law. Don’t say it wouldn’t happen – that is, after all, nearly what it came to in France a few years ago – the French Govt was forced to back down.

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  125. martinh (1,272 comments) says:

    QSTFarmer- no its not the disowned Labour plan, its my own

    1)i would start with Facebook Google and Apple expedia WOTIF . I have no idea about NZ herald tax situation
    Foreign Airlines- good question, il think about that.
    2)Id make sure NZ companies couldnt expense it for starters, that would make their market dry up faster than a drip in a dryer
    3)Id make them pay the same amount as NZ companies do
    4)Yes of course, that would be great-equity ps Xero- a prospect- last time i looked their revenue only matched a small percentage of costs, careful you dont get carried away, i remember the last dotcom bubble and bust
    5)What are you saying that they prefer to do no business rather than pay proper tax? do you always run scared of bullies?

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  126. OneTrack (3,350 comments) says:

    Pete – “It looks shoddy.”

    It’s beyond shoddy. They just don’t seem to be even thinking about what they are saying and doing. They aren’t thinking things logically through. For a start, they don’t seem to have thought about how they would actually get taxes out of these big offshore companies.

    All we have ever got is Cunliffe suggesting he would call the CEO of Google in to his office and saying “We can do this the easy way or the hard way”.

    Well DC, a clue, they are going to choose the “hard” way. What are you going to do then?

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  127. Pete George (23,793 comments) says:

    It either has to be that they don’t have a clue, or they know very well but hope to fool enough voters by talking tough while knowing that it’s very complex and difficult and requires extensive international cooperation to realistically address it.

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  128. martinh (1,272 comments) says:

    So QSTfarmer
    You also support a company starting up in NZ and then moving to Ireland so they can avoid paying tax here, great one, that loop hole is really going to help long term planning for the tax base here.
    I look forward to your replies

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  129. queenstfarmer (782 comments) says:

    martinh… I think it is clear to everyone reading that you are completely out of your depth and detached from reality on this. But I will make a final effort:

    1. So you would pass laws specifically targetting certain foreign companies only. I hope you won’t mind if the US and other countries reciprocate and introduce special taxes on, say, NZ produce and dairy exporters – as has happened between other countries. You are seriously willing to risk causing untold damage to NZ’s economy, not to mention our international relations, in order to chase a few million dollars from Facebook and Google.

    2. Before, you said you wouldn’t punish NZ companies for using FB etc, but now you say you will by disallowing normal business expenses. Which, as you say, would deter them from using it. So, you would (a) make it more expensive for NZ companies to use online services; (b) incur massive red tape for small businesses; (c) risk reciprocal punitive tax action in other countries, basically tarriffs against buying anything from NZ and forcing buying local instead. Yes I’m sure that is in NZ’s best interest, and not in breach of goodness knows how many treaties.

    3. “Id make them pay the same amount as NZ companies do” – but martinh, how would you know the NZ-derived taxable income of Facebook, Google, etc? How would you force them to give the IRD their documents? Would you send a team of NZ IRD agents to the US to knock on Google’s door and demand to carry out a tax audit?

    4. Well you’ve really jumped the shark here martinh. You’d be happy to see NZ’s leading tech prospects – potentially worth billions – kneecapped in a futile effort to force foreign companies to pay some unknown amount of tax in NZ. But hey, as you said, it was just a tech bubble last time, so let’s not worry about that, eh.

    5. “What are you saying that they prefer to do no business rather than pay proper tax” – if your crazy scheme is what you call “proper tax”, then I would say yes, they would prefer to do no business! Again you fail to accept that these companies are operating entirely within the law as it has existed for decades, and are paying the “proper tax” exactly as the law requires.

    This is an interesting subject, but I don’t think you have either the understanding or maturity to take this any further.

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  130. ross69 (3,652 comments) says:

    It’s always fascinating seeing which Tories support multi-nationals paying 2% tax on profits.

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  131. Kea (13,554 comments) says:

    ross69, not everyone can earn a living by spreading their legs laying back and voting Labour.

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  132. martinh (1,272 comments) says:

    QueenstFarmer
    Havent heard maturity call in a long time. It reminds me of how trite a saying that is, its like your answers.
    1) Provide your evidence that Fonterra is getting accused of not paying fair taxes overseas. Put up or shut up, they are not a digital company.
    2) No you misunderstood, they could use it no problems, just use the local subsidary otherwise you wont get it deducted as an expense.
    3)You misunderstood again. Their NZ subsidary would be charged the same tax rates as NZ companies. Fairs fair
    4)So you think its ok for companies to come here to start, pay no tax as they are currently operating at a loss, and when they make money they will then bugger off and charge NZers yet not pay us any tax. Wow you must be into opening the doors to boat people too. What a great way we can get used and then dumped
    5)Thats why im saying the law/tax guidance needs to be changed.

    QST Famer, so far your argument is this cant be done as it will put start ups off coming here- which i have successfully argued is not a long term asset due to these exact current tax problems. And your other point is that if we make special laws for some companies then overseas companies will put them on to our company. Will last time i looked NZ companies were not operating in substancial numbers in this digitial space which is operating in a tax environment not currently designed to deal with it.

    You a one person i definitely would not want in ground control if i was on Apollo13, too hard too hard, help me mummy

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  133. Ed Snack (1,939 comments) says:

    It’s always interesting to see which commenters haven’t got a clue but do understand greed and envy very well (having a. Massive case of it them selves), eh Ross69 ?

    For any company that is part of a multiple-national, NZ has quite stringent rules about both transfer pricing and thin capitalization. If the IRD wanted to tax, for example, Apple, higher on its sales in NZ then it has the tools to do so within the established rules.

    This whole outbreak is simply part of a standard strategy by the left, to make greed and envy the centrepiece of their campaigns.

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  134. Swifty (26 comments) says:

    Queen Street Farmer.

    An excellent series of posts from you today.

    A very good illustration of why recent comments from some on the left ring so hollow.

    Many thanks.

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  135. martinh (1,272 comments) says:

    Ed.
    Seems like they are all in need of an audit and id say the IRD really needs to reconsider the adequacy of their low tax jurisdiction/ territory list

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  136. martinh (1,272 comments) says:

    Luckily im pretty sure that the IRD isnt on Queen st so we dont have to worry that itl be Queenstfarmer working on that

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