Authorities in Tokyo are asking Apple to pay $98 million in back taxes after incorrectly exempting foreign tourists and resellers from a consumption tax. Nikkei reports that Apple stopped tax-free shopping in June after incorrectly exempting bulk orders of iPhones and other hardware.
The $98 million tax bill comes off $26 billion in sales during fiscal year 2022 for Apple Japan, and Apple has reportedly filed to amend its tax return. Japan offers tax-free shopping to tourists staying in the country for less than six months, and no tax exemption is offered to resellers.
“Bulk purchases of iPhones by foreign shoppers were discovered at some Apple stores, a source said,” Nikkei reports. “At least one transaction involved an individual buying hundreds of handsets at once, suggesting that the store missed taxing a possible reseller.”
The publication adds that tax authorities in Tokyo have dropped tax bills for the same reason on at least two other major retailers since last year. Apple’s 13 billion yen tax bill contributes to over 100 billion yen in unpaid consumption taxes, Nikkei reports, which puts Apple Japan’s tax bill in perspective.
“Japan has made inbound tourism and consumption a centerpiece of its growth strategy since 2012, expanding flight slots and duty-free stores,” Nikkei writes. “Tax-free purchases, a measure of foreign visitors’ appetite for shopping, set a third straight yearly record in 2019 at over 340 billion yen, the Japan Department Stores Association reported.”
Apple CEO Tim Cook spent part of December visiting Japan, oddly enough, to drop in on iPhone part suppliers including Sony. Japan authorities have also recently pressured Apple to support multiple app stores for iPhone. Apple has recently seen record drops in App Store revenue in Japan and other nations. That problem could be compounded by more competition as Apple reportedly plans to allow third-party app stores next year starting in Europe
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