Apple pays $118M tax for underreported iTunes Japan income, report says

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Japan's tax authority ordered Apple to pay about 12 billion yen (roughly $118 million) in taxes for improperly reporting earnings associated with its iTunes unit, according to local reports Friday.




Local broadcaster NHK said the Tokyo Regional Taxation Bureau levied the fee after it determined Apple's iTunes arm had not been paying a withholding tax on Japanese earnings, Reuters reports.

While the exact timeframe in which the presumed accounting error occurred is not clear, Apple has since settled the debt. Whether the tax office assigned penalties for the miscalculation is also unknown.

Today's news comes as the tax practices of Apple and other multinational companies fall under intense scrutiny from governments around the world.

The European Commission in August ordered Ireland to collect $14.5 billion in back taxes from Apple. The executive body deemed the low tax rates afforded Apple by the Irish government amounted to illegal state aid. Both Apple and Ireland plan to appeal the decision.

Not coincidentally, Apple diverted profits from iTunes Japan to its international operations in Ireland, a provision allowed for by assigning software licensing control to offices in Dublin rather than Japan.

Comments

  • Reply 1 of 12
    OK.  So I guess this is an audit for this year that found under reporting within a sovereign country.  That's fine.

    The EU should still not get a penny because Ireland agrees that Apple does not owe a penny more.
    SpamSandwichjbdragon
  • Reply 2 of 12
    OK.  So I guess this is an audit for this year that found under reporting within a sovereign country.  That's fine.

    The EU should still not get a penny because Ireland agrees that Apple does not owe a penny more.
    If Ireland has to collect the back taxes, The EU doesn't get any it all goes to Ireland.
  • Reply 3 of 12
    And that money will just barely pay off the corrupt government officials who think they are entitled to that money.
    SpamSandwich
  • Reply 4 of 12
    Ireland's Parliament has held considerable debate to decide if it should accept Apple's 13 Billion and destroy its role as a place to locate multinational companies. It wisely decided to reject the EU's intervention into Ireland's democratic government.
    SpamSandwich
  • Reply 5 of 12
    croprcropr Posts: 815member
    And that money will just barely pay off the corrupt government officials who think they are entitled to that money.
    What a great insight in the internal workings of the Japanese government.  You must have worked there yourself
    wdowell
  • Reply 6 of 12
    Well, well, well... This is starting to become a habit... Italy and now Japan... How many other places to their 'accidentally' cock up paying?
    singularitydasanman69SpamSandwich
  • Reply 7 of 12
    So... Is Tim Cook going to write to customers in Japan going on about 'the right thing to do' and giving them a lecture on 'fairness' ? Or is Apple going to keep stumm as it's caught red-handed?
    edited September 2016 larryadasanman69
  • Reply 8 of 12
    OK.  So I guess this is an audit for this year that found under reporting within a sovereign country.  That's fine.

    The EU should still not get a penny because Ireland agrees that Apple does not owe a penny more.
    If Ireland has to collect the back taxes, The EU doesn't get any it all goes to Ireland.
    Ireland will not get all of the money. Other countries in the EU can claim part of the money. And to think it was the greed and dishonesty of the politicians in the USA that started the EU investigation. 
  • Reply 9 of 12
    wdowell said:
    So... Is Tim Cook going to write to customers in Japan going on about 'the right thing to do' and giving them a lecture on 'fairness' ? Or is Apple going to keep stumm as it's caught red-handed?
    You obviously don't understand how taxes work.

    Lets say you've claimed certain deductions on your W-4 form in the U.S. You then get paid through the year. But at the end of the year you find out you have a bill because your deductions were wrong. Essentially you kept those taxes instead of paying throughout the year. At the end you owe more. If you were paying periodic taxes (like small business owners who pay quarterly taxes) then you might be issued a penalty. This can happen simply if you estimated incorrectly.

    At my first business, this happened to the partners and we got slammed with a huge tax bill because we guessed wrong. So we paid it. Nothing illegal, it's just difficult sometimes to get these things just right. You could also use this system as financial leverage. You might opt to have lower estimates if you think something is going to happen in the future that levels it off or if you need the money and plan to pay the penalty sort of as interest on the loan (which is usually a really cheap loan)

    It doesn't mean Apple did anything illegal or even unethical. It's simply the way the tax game is played. Businesses attempt to pay as little as possible and governments try to take as much as possible and through these "checks and balances" it works out somewhere in the middle.
  • Reply 10 of 12
    Yakuza protection money.
  • Reply 11 of 12
    Not that I think Apple is a first rate company (I do) but this almost feels like these countries are going after deep pockets. I think Apple needs to bring back all manufacturing and just do retail in other countries. They also need to hire better accountants. Even I could do better than their accounts seem to be doing
  • Reply 12 of 12
    When the other multinational companies are pursued over to taxes, will they also make the news?
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