Apple pays £89m tax fine for underreporting income in Japan

The news comes weeks after the EU hit Apple with a record £11bn tax penalty

Zlata Rodionova
Friday 16 September 2016 09:53
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Apple’s unit in question has reportedly paid the amount that was asked by the Tokyo Regional Taxation Bureau
Apple’s unit in question has reportedly paid the amount that was asked by the Tokyo Regional Taxation Bureau

Apple has been ordered to pay about 12bn yen (£89m) in taxes for improperly reporting income associated with its Japan iTunes unit, according to reports.

The news comes weeks after the EU hit Apple with a record £11bn tax penalty, ruling its 25-year “sweetheart deal” with Ireland was illegal.

Apple’s unit in question has reportedly paid the amount that was asked by the Tokyo Regional Taxation Bureau.

The tax authority argued that the iTunes unit, which sends parts of its profits earned from fees paid by Japanese subscribers to another Apple unit based in Ireland, had not been paying a withholding tax on these earnings in Japan, according to local broadcaster NHK.

It was not immediately clear when the bureau issued the penalty or when Apple agreed to pay it, and the tech giant did not respond to a request for comment.

The EU has been a strong critic of multinational companies such as Apple, Starbucks and Fiat Chrysler that have benefited from keeping their money overseas.

The move allows these companies to avoid paying hefty taxes they could face by bringing the money back to the US.

EU orders Apple to pay up to 13 billion euros tax to Ireland

European Commissioner Margrethe Vestager, in charge of competition policy said that EU member states cannot give tax benefits to selected companies, after Apple was ruled to pay £11bn in tax to Ireland last month. “This is illegal under EU state aid rules. The commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” she said.

“In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”

Tim Cook, Apple’s chief executive, said the Ireland tax ruling was “total political crap” and “maddening”.

Apple and Dublin plan to appeal the ruling, arguing the tax treatment was in line with EU law.

Theresa May’s new government fuelled the debate over tax avoidance saying it would “welcome any company” to the UK just hours after the EU announced the Apple decision.

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