Apple Japan ordered to pay 14 billion yen on duty-free sales | The Asahi Shimbun: Breaking News, Japan News and Analysis

The Tokyo Regional Taxation Bureau ordered Apple Japan Inc. to pay consumption taxes of around 14 billion yen ($105 million) relating to its duty-free sales, according to sources.

The bureau’s investigation found that some “duty-free” transactions made at the Tokyo-based company’s stores did not meet the requirements for exemption from the tax. These transactions included bulk purchases of iPhones that officials believe were made with the intention to resell, the sources said.

Apple Japan, the Japanese unit of U.S. technology giant Apple Inc., is believed to have already amended its tax return after the investigation, according to the sources.

Apple Stores in Japan have suspended their duty-free sales.

The consumption tax is levied on products when they are sold and bought in Japan.

Therefore, the tax is generally not imposed when foreign tourists buy something in Japan and bring it back to their home countries.

However, duty-free doesn’t apply to purchases that are made with the intention of reselling the products.

The Tokyo Regional Taxation Bureau started investigating the company’s tax affairs in or after 2021, according to the sources.

It found some suspicious duty-free sales of iPhones and other products at Apple Stores.

In some of the transactions, for example, one foreign tourist bought several hundred iPhones.

Bureau officials concluded that such bulk purchases were likely made to resell the items.

They determined that of the total duty-free sales the company made in two years to September 2021, around 140 billion yen should not have been exempt from the consumption tax, the sources said.

The bureau then ordered the company to pay the additional consumption tax of around 14 billion yen, they said.

The total includes a penalty for making an initial deficient tax declaration.