Apple has been forced to file an amended tax return in Japan to the tune of 13 billion yen ($98 million) after authorities discovered bulk sales of iPhones and other products that were incorrectly exempted from Japan's consumption tax.
Nikkei Asia reports that Apple has filed the amended tax return after it emerged that customers had been making bulk purchases of devices like the iPhone 14 in order to resell those handsets.
Japan allows tax-free shopping for visitors who spend less than six months in the country on items including electronic goods. However, the 10% consumption tax still applies to devices bought for resale purposes.
Apologies for the inconvenience
In a statement, the company confirmed it no longer offers tax-free shopping in its stores and apologized for the inconvenience. The Nikkei Asia report highlights the "unusually large" back tax charge "underscores a glaring loophole in Japan's unique tax-free shopping rules."
"Tax-exempt purchases of consumables such as cosmetics or pharmaceuticals are limited to 500,000 yen, but no cap exists for general goods like home electronics," the report explains. "Stores are responsible for covering unpaid taxes on any purchases failing to meet the requirements that slip through the cracks."
Nikkei reports that tax authorities have pulled in 86.9 billion yen in back tax consumption payments in the year through June. The total levied from Apple represents a huge portion of that (more than 15%).
As the report notes, Japan's tax exemption system is unique in that it offers tax reductions to customers at the point of purchase. Elsewhere in the world, customers are usually required to reclaim their taxes when they leave the country by filling in paperwork.
Apple operates 10 retail stores in Japan, including five in the capital, Tokyo. Earlier this year Apple announced it was demolishing and relocating its historic Apple Store Ginza in Tokyo. The Ginza store was Apple's first retail location outside of the U.S.
