japan, apple

A report by Nikkei Asia shows that Apple Japan is being charged around $98 million in additional taxes for “bulk sales of iPhones and other devices to foreign tourists that were incorrectly exempted from the consumption tax.”

As explained by the publication, foreign customers that spend less than six months in Japan don’t need to pay the 10% consumption tax to buy souvenirs or everyday goods. The problem is that Tokyo authorities discovered that resalers purchased hundreds of gadgets at Japanese Apple stores without paying the proper tax.

Bulk purchases of iPhones by foreign shoppers were discovered at some Apple stores, a source said. At least one transaction involved an individual buying hundreds of handsets at once, suggesting that the store missed taxing a possible reseller.

While the company is believed to have filed an amended tax return, Apple has stopped offering tax-free shopping since June. To Nikkei, the Cupertino firm said it doesn’t provide “tax-free shopping at our stores” as it “apologizes for the inconvenience.”

Nikkei says this “unusually large back tax charge” sheds some light on the “glaring loophole in Japan’s unique tax-free shopping rules.” Cosmetics or pharmaceuticals are limited to 500,000 yen, while general goods like home electronics don’t have a maximum that a foreign customer can spend.

A survey by tax authorities found roughly 24,000 cases of failure by companies to report consumption tax payments in the year through June. A record total of 86.9 billion yen in back taxes was levied, up 11% from five years earlier.

(…) Japan has made inbound tourism and consumption a centerpiece of its growth strategy since 2012, expanding flight slots and duty-free stores. Tax-free purchases, a measure of foreign visitors’ appetite for shopping, set a third straight yearly record in 2019 at over 340 billion yen, the Japan Department Stores Association reported.

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