Apple ordered to pay $98 million in back taxes to Japan, set to be fined for improper declarations

Apple’s Japanese arm is being charged 13 billion yen ($98 million) in retro taxes for bulk sales of iPhones and a number of other Apple devices to foreign tourists that were incorrectly exempted from the consumption tax that is levied when customers buy and use the device in Japan, according to an article in The Nikkei, the world’s largest financial newspaper.

Citing unidentified sources, the Nikkei reported on Tuesday that bulk purchases of iPhones by foreign shoppers were discovered at some Apple stores with at least one transaction involving an individual buying hundreds of handsets at once.

Japan permits visitors who are staying for less than six months in the country to purchase goods without paying the 10 per cent consumption tax that is levied on all items. However, this exemption does not apply to purchases made with the intention of reselling them.

Nikkei reports that Apple Japan is said to have submitted an altered tax return to hide the fact that customers were buying iPhones and other Apple products in bulk, which were then being sent abroad.

Apple has often been accused of playing across blurred lines in its pursuit of avoiding paying taxes and has often done things in a convoluted manner to show that its profits have been minimal.

Apple may also be fined for the irregularities that led to the discovery of this massive tax evasion tactic. Although to the extent to which Apple may be fined, remains to be seen. In response to this latest tax liability that has been imposed on Apple, the company has stopped selling tax exempted goods in their stores, meaning that even genuine tourists who purchase devices from the story need to pay the 10 per cent consumption tax.

Apple’s Chief Executive Officer, Tim Cook visited Japan earlier this month and announced that the company had invested more than $100 billion in its Japanese supply network over the last five years.