Apple Japan charged with $98Mn additional taxes for violating rules

Apple Inc’s Japan unit is being charged $98 million in additional taxes by the authorities in Tokyo for overlooking abuses of rules covering duty-free purchases.

It was reported that foreign shoppers purchased bulk of iPhones from some Apple stores with at least one transaction involving an individual buying hundreds of handsets at once. Apple Japan is believed to have filed an amended tax return.

The company said, “We do not offer tax-free shopping at our stores. We apologize for the inconvenience.” Apple’s sales in Japan totaled $26 billion in fiscal 2022. Tax-free purchases, a measure of foreign visitors’ appetite for shopping, set a third straight yearly record in 2019 at over 340 billion yen. But improper exemptions cost the government money that it needs to fund social security programs.

Tax-free shopping in Japan allows visitors staying for less than six months to purchase items such as souvenirs or everyday goods without having to pay the 10 percent consumption tax, but this exemption does not apply to purchases for resale.

Tax-exempt purchases of consumables such as cosmetics or pharmaceuticals are limited to 500,000 yen, but no cap exists for general goods like home electronics. Stores are responsible for covering unpaid taxes on any purchases failing to meet the requirements that slip through the cracks.