Apple forks over $118m in tax to Japan over iTunes profit misreporting

Apple is struck with another tax bill, following a major ruling in August from the European Union over Apple's tax practices.

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Image: Jason Cipriani/ZDNet

Apple has been forced to pay 12 billion yen ($118 million) in back taxes, after local authorities found its iTunes division in Japan under reported income in 2014 and 2015.

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The Tokyo Regional Taxation Bureau found the Apple subsidiary was sending a portion of its profit earned to another unit in Ireland. The unit paid for software licensing, and Apple didn't pay taxes on the international transaction, according to local media reports.

Apple has already paid the tax bill, reports The Financial Times citing local media. It's not clear when Apple paid or when the local tax authorities released their ruling against Apple.

Local news outlet Yomiuri Shimbun reports a Japanese company, in this case iTunes Japan, must pay a withholding tax rate of 20.42 percent on any royalties it pays to a foreign company.

We've reached out to Apple for confirmation.

Apple's tax practices in Ireland have become under increased scrutiny. In August, the European Commission ruled Ireland should claim €13 billion in 'illegal tax benefits' back from Apple.

The EC declared tax arrangements between Apple and Ireland had allowed the company to pay "substantially less tax" than other companies and were illegal under state aid rules.

In an August statement, Apple said: "Both Apple and Ireland plan to appeal the decision and we are confident that it will be overturned by the courts of the European Union."

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