Japanese Tax Authorities Hit Apple with 125 Billion Yen Consumption Tax... Bulk Sellers Distributing Large Quantities of iPhones

Apple Ends Tax-Free Benefits in Japan... Files Amended Tax Return with Tax Authorities

[Asia Economy Reporter Kwon Haeyoung] It has been revealed that Apple gave tax exemption benefits to resellers such as peddlers in Japan and sold iPhones in large quantities, resulting in the Japanese tax authorities imposing back taxes of 13 billion yen (approximately 125 billion KRW). This was because Apple provided tax benefits to resellers despite not meeting the tax exemption requirements and sold iPhones worth about 130 billion yen (approximately 1.25 trillion KRW).

On the 27th, Nihon Keizai Shimbun reported that Japanese tax authorities discovered that foreign tourists purchased iPhones in large quantities at Apple Stores, including at least one case where an individual bought hundreds of phones at once.

Japan exempts foreign visitors staying less than six months from the 10% consumption tax when purchasing products. However, tax exemption benefits are not provided if the products are purchased for resale purposes. The Japanese tax authorities' judgment is that tax exemption benefits should not be given for acts such as one person buying hundreds of phones at once, suspecting reseller activity.

Nihon Keizai pointed out, "Foreign tourists improperly received consumption tax exemptions when purchasing iPhones and other Apple devices," and "Apple did not properly identify suspicious large-scale iPhone purchases by foreign visitors."

On the 7th, when Apple's new iPhone 14 series was officially released in Korea, citizens were examining the products at the Apple Store in Myeongdong, Jung-gu, Seoul. Photo by Moon Honam munonam@

It is reported that since June, Apple has ended tax exemption benefits at Apple Stores in Japan and submitted amended tax returns to the Japanese tax authorities. Earlier this month, Apple CEO Tim Cook visited Japan and announced that Apple had invested more than $100 billion in Japan's supply chain over the past five years. Apple's sales in Japan for the 2022 fiscal year reached $26 billion (approximately 33.2 trillion KRW).

Apple officially stated, "We do not provide tax exemption benefits at Apple Stores," and "We apologize for the inconvenience caused."

Nihon Keizai pointed out that this imposition of back taxes on Apple revealed loopholes in Japan's tax exemption regulations. Japan limits the tax-exempt purchase amount for consumer goods such as cosmetics and pharmaceuticals to 500,000 yen (approximately 4.8 million KRW), but there is no upper limit for electronic products. In particular, since 2012, Japan has expanded duty-free shops as part of its growth strategy focusing on tourism and consumption. According to tax authority investigations, there were 24,000 cases of corporate consumption tax non-payment transactions until June this year. The amount of back taxes was 86.9 billion yen (approximately 830 billion KRW), an 11% increase compared to five years ago.

Nihon Keizai stated, "(Apple) is responsible for compensating for the leaked unpaid taxes by violating tax exemption regulations," and "For foreign tax exemption benefits, like other countries, requiring purchase declarations upon departure and refunding taxes would reduce the possibility of tax revenue loss."