Apple Japan slapped with 14 bil. yen in back tax over duty-free sales

Apple Inc.'s Japan branch was slapped with 14 billion yen ($105 million) in additional taxes after authorities found bulk sales of iPhones and other items to foreign visitors were incorrectly exempted from consumption tax, a source close to the matter said Tuesday.

The Tokyo Regional Taxation Bureau found Apple Japan's approximately 140 billion yen tax-exempt sales over two years through September 2021 were the result of fraudulent duty-free purchases to be resold for commercial purposes, the source said.

Tax-free shopping is only admitted for foreign visitors who buy souvenirs or daily goods within six months of entering Japan and take them abroad.

The taxation bureau, which started its investigation last year, found multiple unusual transactions including a tourist buying several hundred devices at an Apple store, according to the source.

The 14 billion yen, which covers additional tax on underreported sales, is believed to be the highest additional consumption tax charged on record for tax-free sales.

As the price of an iPhone is cheaper in Japan than abroad, the tax bureau suspects that these individuals were vendors seeking to take advantage of the country's duty-free system and turn a profit by bypassing consumption taxes.

In June, the bureau gave administrative guidance to businesses about fraudulent duty-free purchases after cases of bulk buying of cosmetics and other items at large department stores for reselling overseas came to light.

© Kyodo News