Apple Gets $105 Million Tax Bill in Japan for Bulk Sale of iPhone to Tourists: Report

The Tokyo unit of US technology giant Apple has been slapped with $105 million (roughly Rs. 870 crore) in additional taxes over bulk duty-free sales of iPhone smartphones and other Apple devices to foreign visitors, Kyodo News reported.

Citing a source close to the matter Kyodo News reported that the Tokyo Regional Taxation Bureau found Apple Japan’s approximately $1,04,16,84,000 (roughly Rs. 8,634 crore) tax-exempt sales for two years through September 2021 were made by fraudulent duty-free purchases to be resold for commercial purposes.

The taxation bureau, which began its investigation last year, found multiple unusual transactions, including a tourist purchasing several hundred devices at an Apple store, the Japanese news agency reported.

The additional tax of $105 million imposed on underreported sales, is believed to be the highest additional consumption tax charged on record for tax-free sales, as per the news report.

Only foreign visitors who purchase souvenirs or daily goods within six months of arriving in Japan to take them abroad can do tax-free shopping. The products are subject to taxation if they are bought to resell, as per the Kyodo News report. However, the stores need to assess the nature of purchases.

Certain goods like iPhones are said to be cheaper in Japan than in other nations. The tax bureau suspects vendors want to take advantage of Japan’s duty-free system by soliciting visitors to Japan to buy the products and then sell them abroad for profit, according to the news report.

In June, the Taxation Bureau announced administrative guidance to department stores to demand products be sold properly after cases of bulk buying of cosmetics and other products at departmental stores for reselling came to light.

The cases included a group of seven Chinese nationals, who used tourist and other visas to visit Japan in 2020 and Osaka Regional Taxation Bureau charged them around $56,58,162 (roughly Rs. 46 crore) on their purchases of $5,73,26,115 (roughly Rs. 475 crore) worth of luxury brand goods, as per the Kyodo News reported. It was found that the products, which included watches and handbags, were bought for resale.