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Apple hit with $118m ‘back tax’ payment in Japan

Tokyo authorities have imposed a back tax of $118 million on an Apple subsidiary over money transfers to Ireland, reports said Friday, as the IT giant’s tax payments come under global scrutiny.

The Tokyo Regional Tax Bureau ordered music distribution firm iTunes KK to pay 12 billion yen in unpaid taxes and the firm fully paid the sum, the mass-circulation Yomiuri newspaper and other media said, citing unnamed sources.

The extra tax was imposed on about 60 billion yen that iTunes transferred to Apple in Ireland over two years to 2014, the Yomiuri, public broadcaster NHK said and other media said.

The Japanese authority found a large amount of profits were transferred from the iTunes company in Tokyo to an Apple subsidiary in Ireland via Apple Japan, Kyodo News quoted sources as saying.

The authority argued the transferred money should have been defined as royalty fees subject to income tax payments but the iTunes company did not declare the money as such, Kyodo said.

The tax bureau said it does not comment on individual cases. Apple Japan, meanwhile, told AFP in an email it had no comment.

The press reports came as Apple’s latest iPhone was launched in Japan on Friday.

Apple’s operations in Ireland have come under scrutiny.

The European Commission, the EU’s powerful competition regulator, last month ordered Apple to reimburse a record 13 billion euros ($15 billion) in unpaid taxes in Ireland.

In its landmark decision late last month, the Commission argued that Dublin handed Apple favourable tax terms that amounted to state aid — illegal under its rules.

EU Competition Commissioner Margrethe Vestager called Apple’s operations in Ireland a “sham”, designed to funnel revenue from across the globe to avoid paying tax.

Apple chief Tim Cook criticised the ruling and urged Ireland to appeal it to secure future investments.

Ireland’s fragile minority government agreed earlier this month to recommend an appeal but said it was recalling parliament early to debate the issue.


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