#Apple has been slapped with another tax bill amounting to $118 million (12 billion yen) in Japan for under-reporting their income, according to Japanese media reports on Friday. The "Financial Times" reported that the giant company had successfully paid the amount, citing local media.
According to broadcaster "NHK", The Tokyo Regional Taxation Bureau discovered that the Japanese unit of Apple, which sends part of its profits generated from fees paid by subscribers based in the country to an Ireland-based unit to pay for licensing of the software, had failed to pay withholding tax on its earnings in Japan. This news comes as a major shock to the company at a time when they recently rolled out their much coveted iPhone 7. Apple has decided to remain numb on this issue since then.
Apple was fined $14.5 billion in Ireland in August
Apple and many other multinational companies have come under much tax scrutiny from governments of various countries. In August 2016, the European Union ordered the company to pay Ireland $14.5 billion for illegal tax benefits in the country.
The topic of European taxes has been a debatable and sensitive issue for the last several years. In the past, Ireland had taken a step further by granting tax benefits to Apple specifically, which was unfair for other organizations based in the country. Later, Commissioner Margrethe Vestager labeled it 'illegal' and ordered Apple to repay the tax benefits.
Vestager stated that it’s illegal for member states to give tax benefits only to select companies under EU state aid rules. Because of this ‘selective’ treatment, Apple paid a cumulative tax rate of 1% on its profits generated from Europe in 2003. The figure went down further and hit a rock bottom of 0.005% in 2014, indicating Apple paid only $50 per $1 million in profit.
The company is still putting up a strong fight against its EU tax bill with the much-needed support from Ireland. Of late, Ireland has turned out to become a strong destination for foreign subsidiaries mainly because of the fact that their corporate tax rate of 12.5% is the lowest among the developed nations.
Apple CEO’s views
Apple CEO, Tim Cook is of the opinion that the fine imposed in Ireland has been heavily politicized and states that there is ‘no basis in fact or in law’ for the charge. He’s confident that the ruling will be reversed after an appeal by Ireland. #iPhone