Apple Pays $118 Million Tax Bill in Japan After Underreporting Profits

The Tokyo Regional Taxation Bureau said Apple under-reported its profits in that country and, as a result, the Cupertino-based tech giant paid $118 million.

Apple has also encountered similar tax related troubles in China where in 2015 it had to pay $71 million.

The Japanese authority found a large amount of profits were transferred from the iTunes company in Tokyo to an Apple subsidiary in Ireland via Apple Japan, Kyodo news agency quoted sources as saying.

The royalties earned should have been subject to a 20.42 per cent withholding tax but instead, as the royalties were earned through iTunes software built into the iPhone, the money was included into the cost of buying an iPhone handset, according to FT.

The bureau said it does not comment on individual cases. Apple Japan, meanwhile, told AFP in an email it had no comment.

United States businesses have warned European leaders they risk a “grievous self-inflicted wound” unless they overturn Brussels’ demand that Apple pay the Irish government €13bn.

Apple doesn’t want to cover the tax bill, nor the penalties, but it might just have to; the Commissioner of Competition in the European Union stated, simply, “This is illegal under European Union state aid rules”.

Apple CEO Tim Cook believes the fine in Ireland is purely political and has argued there’s “no basis in fact or in law” for the original charge. This comes right after the reports by a Japanese Government advisory report where it was reported that Apple and Google are reducing app competition.

Apple’s operations in Ireland have come under scrutiny.

Like the EC, Japan’s not likely to be the last group tapping on Apple for more tax dollars.

The extra tax was imposed on about ￥60 billion that iTunes transferred to Apple in Ireland over two years to 2014, Yomiuri, public broadcaster NHK and other media said.