back to article Apple's tax bill: Big in Japan. Like, $120m big

Apple has again been hit with a relatively small bill for skirting tax laws, this time in Japan. A report from national broadcaster NHK World claims that the Tokyo Regional Taxation Bureau has told Apple to cough up $120m (12.3bn Yen) to cover back taxes that the Cupertino giant failed to pay. The report notes that Apple has …

  1. Khaptain Silver badge

    Scapegoats

    Obviously Apple have become the medias and governments Scapegoats for the moment, it helps keep the prolétariats attention fixed on non essential matters.

    Now, let's get down to the real busines of bringing the bankers, chartered accountants and ministers out into the open... Then the fun will really start.

    Jérôme Cahuzac is only a start, let's see how much more dirt is truly hiding under the carpet...

    1. Magani
      Unhappy

      Re: Scapegoats

      "...it helps keep the prolétariats attention fixed on non essential matters."

      So the facts that Apple has been ordered to pay £89m tax fine for underreporting income in Japan, the EU hit Apple with a record £11bn tax penalty, paid $85 million in Australian income tax last year, despite making almost $8 billion in local revenue,etc, etc, are 'non essential matters'. Huh?

      If that doesn't make your blood boil from either a moral or an ethical standpoint, then you've totally lost me.

      1. Khaptain Silver badge

        Re: Scapegoats

        "If that doesn't make your blood boil from either a moral or an ethical standpoint, then you've totally lost me."

        Apple et al are doing what they are doing because people in very high places put these practices in place to hide their own damn dirty work. I believe that Apple are being used as a scapegoat in order that attention is drawn away from the real dirty doers.

        The sums of money that you mention are probably insignificant compared to what the banks, fro example, are capable of hiding.

        If you want to start talking big money, let's have a look at Rothchilds, VISA; Mastercard, Defence contracts, Space contracts, the Oil business, Pharmaceutical companies, Cocaine and drugs at the international level etc , all of whom we never seem to mention. Undoubtedly they are being protected, but by whom, the damned governments/ministers/bankers ?

        What makes my blood boil is that the focus of these affairs only remains wherever the "media" point their fingers and that is all that people seem to be able to focus their attention on. I really don't believe that Apple are the worst of the bunch, they are only playing the same game as a hundred other un-mediatised and protected companies/organisations/governments.

        As I stated, Apple are being used as a Scapegoat, they are probably only the tip of a very, vary large iceberg.

        The governments and co control the media to a level whereby the populations are drip feed enough material to keep their hunger at bay.

        1. Anonymous Coward
          Anonymous Coward

          Re: Scapegoats

          Talking about "big money" and looking at banking, oil, etc. doesn't preclude looking at Apple, too. Apple is a lot less politically connected than say the Rothschilds, so if I was looking under my couch cushions for extra money I'd leave those guys alone too!

          As for the drug trade, I doubt Japan or any other major country is too worried about taxing drugs they consider illegal. Yeah, technically the US has a law on the books allowing you to pay taxes on illegal drugs, but that is mainly there to give them a way of putting away drug kingpins who are successful at making it appear like all the murdering, smuggling and selling were being done by their underlings - if they are making a $1 billion a month in cash with no explanation while guys around them can be proven to be involved in the drug trade and they can't, the US will put them away for years on tax evasion instead.

      2. Roger Varley

        Re: Scapegoats

        "If that doesn't make your blood boil from either a moral or an ethical standpoint, then you've totally lost me."

        Sorry, but it is a simple binary choice.

        Apple et al are either breaking the law (tax evasion) or they are not (tax avoidance). If they are breaking the law then the relevant authorities should be prosecuting and someone should be going to prison.

        If they are not breaking the law, then the relevant authorities should either change the law or if not, should say why they are not changing the law and then shut up about it.

        No court is going to convict if the law is not being broken. The current furore over moral or ethical implications is simply a smoke and mirror exercise to distract attention from the fact that governments have no intention of adjusting the current tax laws. The reasons for this are left as an exercise for the reader.

      3. Anonymous Coward
        Anonymous Coward

        Re: Scapegoats

        Sure, the proletariat should not be interested that the very, very rich are allowed to not pay taxes, basically. They must believe it's a non essential matter, and that is good only them pay taxes. Their attention must be shifted to sport, gossip, etc. All .'essential matters' for them, like in 1984...

        1. Anonymous Coward
          Anonymous Coward

          Re: Scapegoats

          the very, very rich are allowed to not pay taxes, basically.

          Citation please. The very rich often appear (anecdotally) to manage to avoid the marginal rates of tax applied to middle and higher income proles, but I suspect that the facts will show that the very rich still pay vastly more absolute tax per capita than you or I do.

          1. Phil Koenig

            Re: Scapegoats

            If the "per capita" absolute amount of dollars/pounds/etc paid in income tax annually by a billionaire is higher than what a dishwasher at a fish and chips shop pays annually, is that supposed to be some kind of shocking and satisfying revelation of fairness?

            As Warren Buffet (considered to be one of the most highly respected US investors and one of the wealthiest in the world) has pointed-out on numerous occasions, there is something very wrong with the fact that his personal tax rate is far lower than his personal secretary's.

            In short: the wealthy have the attitude and the means to find ways to escape the kind of taxation rates that most of the populace pay. That generally comes down to political power and the resources that capital allows them to expend on the matter.

            In the case of companies like Apple and Google, most of what they have been doing with tax-jurisdiction shopping is actually legal in the USA. It only became a hot-button issue after western countries were financially crippled post-2008 and looking for scapegoats.

            The way I see it there are 2 major issues: the laws that allowed such practices to flourish in the first place (tell the politicians and banksters to solve those - and good luck with that), and the fact that globalized tech companies like Apple and Google which deal heavily in digital 'intellectual property' make it quite trivial to move capital around, since most of their assets are ephemeral and not physical. (In addition to the IP assets, the vast majority of their manufacturing is outsourced to other entities)

            The EU apparently wants to retroactively penalize Apple and make them a high-profile media pariah, but if it was such a big issue going back 10 years in their own backyard, the EU should have dealt with it themselves 10 years ago by making sure member states like Ireland could not grant companies like Apple these low or zero-tax incentives. Instead of waiting 10 years and then trying to make a media circus out of it to deflect attention from their own failings.

    2. Voland's right hand Silver badge

      Re: Scapegoats

      I would not be so sure.

      So far, everybody's else tax avoidance arrangements were found to be nowhere as aggressive as Apple. While everyone was trying to hide some money under the mattress, nobody else managed an effective 0.001% tax rate.

      Also, with Apple's dirty laundry now in the open by the Eu, all other tax authorities now know where to look.

    3. MR J

      Re: Scapegoats

      The "Bankers" shouldn't have bail-outs if and when. On top of that, they need to be TAXED properly.

      But if you have a pension or any level of savings then you would hate for that to be probed. If you have a mortgage or even car loans that need to be repaid then you would also need to be aware that a large shift now could see YOU go bankrupt when interest rates go through the roof to cover cost and profit that would be lost once that type of reform takes place.

      I am not saying reform is wrong, but we have built a "1st world" problem of everyone living on borrowed cash. We need that borrowing to stay cheap enough for people to see everything as okay. A base rate of 10% would make a lot of people wish us back to the old days of corruption and policy manipulation.

      Accountants are there to do everything they can within the limit of the law - They need no real reform, if the law was reformed then they would need to comply.

      Ministers/Politicians need to be moved into a position where everything is fully transparent. Back room deals with these guys should count as treason. Right now they work as middlemen between sectors or even large corps that are in other countries. If you think any reform of them will happen soon then your just nuts. It's like putting an advert in the paper asking for your stolen bike back, make sure it's clean and oiled, and asking for money for time lost - Do you think that the thief will give it back... Nope.

      The tax system is corrupt, There should never be a reason for someone who makes more than you to pay less in tax than you..

  2. Fruit and Nutcase Silver badge
    Joke

    Apple - the gift that keeps on giving

    well, may be not all the tax, all of the time

  3. Fruit and Nutcase Silver badge
    Facepalm

    Apple pay all tax that is due

    I should get the same accountant

    1. Chris Miller

      Re: Apple pay all tax that is due

      Easy peasy:

      Step 1 - incorporate in the US

      Step 2 - earn the bulk of your profits outside the US

      Step 3 - stash any profits in an offshore acccount.

      A peculiarity of US tax law is that you don't (as a corporation) pay any tax until the profits are repatriated. When (if) you do, you'll get stung for US CT which is a whopping (by most international standards) ~40%. That it's so high explains why many US multinationals are keeping their international profits offshore in hopes that the rate will come down.

      Note that when you do repatriate, you can legitimately offset any foreign tax already paid. That's why Uncle Sam is unhappy at the EU's land grab - an extra €12 bn (or whatever it turns out to be when the legal party ends) paid to Eire is €12 bn less for the US.

      International tax law is founded on the principle that profits are due in the country in which they are earned. It's hard to argue that the great bulk of Apple's profits are 'earned' anywhere other than California, so that's where most of the tax is due. Apple can defer this tax by holding it offshore, but the shareholders can't get their hands on it.

      1. matt g

        Re: Apple pay all tax that is due

        If Apple sold their products via mail order overseas, then I would agree with you.

        But, since they've opened a number of overseas subsidiaries to sell directly from stock, often at mark-ups not justified by exchange rates (even allowing for sales taxes), I don't.

        1. katrinab Silver badge

          Re: Apple pay all tax that is due

          The difference in wholesale price between an Apple product and an unbranded Chinese device is down to the work done in Cupertino. The difference between that and the retail price is down to the work done by the people in the country concerned, and the bit left over, the price of the unbranded Chinese device, is down to their manufacturing efforts in China.

      2. Ian Michael Gumby
        Boffin

        @Chris Miller ... Re: Apple pay all tax that is due

        If only it were that simple.

        Revenue recognition is a bit tougher in the digital world and what constitutes revenues earned outside of the US. Even there games can be played.

        Take a certain global coffee shop....

        They ship their products to the EU country with the least amount of taxes, they do this as Company A. The coffee shop in the EU (Company B) buys the supplies from Company A at a markup that sucks up most if not all of the profits. Even though Company B could have bought the coffee, etc ... directly from the same source as Company A so that the revenue rec would be properly recorded in the country where the product was sold.

        Note while this isn't illegal, its a way to do business that will reduce their tax exposure.

        The thing with Apple, Google, Facebook, is that they undervalued assets that they moved offshore and then recognized the revenue in Ireland rather than were the transaction occurred. Don't be a hater of the tax man. At least not here.

      3. midcapwarrior

        Re: Apple pay all tax that is due

        No one, I mean no one pays 40%.

        Don't confuse the nominal rate with the effective rate.

        You get multiple credits, deductions. etc. which substantially lowers the nominal rate.

        It makes for a nice sound bite to quote that rate but as with most it has little to do with reality.

  4. NotBob
    Black Helicopters

    Tin foil hat time

    Seems odd to see all these Apple tax stories just a little while after they resisted their patriotic duty...

  5. Nya

    Performa 6100?!

    Sounds a bit like you were looking for a bit of a Quadra of an angle to the story for a products to place or was there nothing IIse you could find?

  6. DJO Silver badge

    Hubris

    If Apple had used the tax reduction measures to reduce their tax by around 50% it's probable nobody in a position to do anything about it would get that upset.

    Trying to eliminate all tax is just stupidly greedy and not only invites punishment but may well spoil the fun and games for all the other slightly less greedy players.

    1. Pascal Monett Silver badge

      Then spoil their game

      I look forward to a new tax regime : you pay taxes in your home country on your global profit, and can deduct taxes paid in other countries. Every country does the same, and we can say goodbye to these despicable practices.

      Of course, it will never happen.

  7. Anonymous Coward
    Headmaster

    "Apple execs have refuted the allegations"

    They have not. To refute something means to prove it false. What Apple has done is to deny the truth of the allegations, a rather less impressive thing (if you honestly believe me to be a lying bastard with the morals of a sewer rat then you'd rather expect me to lie again and deny it...)

  8. Version 1.0 Silver badge
    Joke

    So unfair

    As we all know, Apple has been unprofitable for years - they just never make much money so why is everyone hounding them with these unfair tax assessments? Poop, poor Apple,

  9. Slx

    I'm just hoping all the various tax authorities and EU competition authorities go after the massive Wall Street and London based, as well as Frankfurt and Paris based banks, the oil companies, the major telcos and the other extremely well connected or even formerly state owned companies that seem to be paying a pittance, with the same vigour that they're going after Apple and some other 'sexy brands'.

    I am annoyed that Apple seem to be 'innovating' to avoid tax, but at the same time I think they are right to a degree in calling this 'political' as the target has been very selective: an iconic US brand and a small country that can't just tell the EU to go away (as the bigger countries have done on things like fiscal deficit rules).

    There's huge "aggressive avoidance" going on all over the place. It's not limited to Apple and it's certainly not limited to Ireland. These companies effectively set their own rules by having such enormous persuasion power either using lobbying tactics in the Washington DC and elsewhere or, somewhere like Ireland (and lots of other countries and EU regions and US states that find themselves in similar positions) holding the carrot of job creation out and threatening economic armagheddon away if there's any innovation on tax collection policies.

    I just think we need general improvement of enforcement across the board, but I think it'll be a cold day in hell before we see major action taken against the financial services sector in particular, but also big energy or other 'pet industries'.

    At the end of the day, it isn't the IT sector that due to pathetically poor regulation nearly drove the global economy off a cliff. It was the financial services sector, who are still largely treated as some kind of gods of capitalism, despite everything!

    So, obviously the most important thing at the moment is to go after the IT sector and coffee companies.

    1. Anonymous Coward
      Anonymous Coward

      Or the concise version "I'm an entitled millenial who wants to stick it to the 1% ... but I like my iPhone so please stop talking about Apple"

      1. Slx

        Not really, I just think that it's very easy to go after consumer product companies while absolutely ignoring the 400 ton home-grown elephants in quite a lot of rooms around the world.

        The fact that these companies get away with not paying tax in the first place is political. The fact that certain companies are selected to pay tax all of a sudden is political.

        What would be non-political would be uniform and proper enforcement and proper international taxation arrangements.

        The Apple and Ireland ruling still has to show that it can prove that the taxation regime Apple received is selective. If the ruling was available to any company / broad category of companies, it won't be a competition case at all. So, there's still quite a way to go with this in terms of appeals before it's over.

        If you want to resolve tax planning though, you need international treaties and some degree of harmonisation to stop companies from just sailing between jurisdictions, which is effectively what Apple was doing, between the US and Ireland.

        1. Mephistro
          Happy

          "If the ruling was available to any company / broad category of companies, it won't be a competition case at all"

          The EU Competition Commission says that's not the case, and if it were, every company in the country would be paying a 0.0005 tax, and there would be money to pay (a minimum wage) only to one Minister, two Gardai and a nurse (to do the Irish NHS work).

  10. adam payne

    CEO Tim Cook dismissed the entire matter as "total political crap" and said that the allegations that Apple only paid a 0.005 per cent tax rate in Ireland are a "made up number."

    If it's a load of total political crap then publish your tax figures. If you are open and honest about this you wouldn't have to keep on denying it and having people not believing you.

    1. Tom 64
      Coffee/keyboard

      a "made up number."

      Yes it is indeed made up in the sense that somebody has calculated it.

  11. ScissorHands
    Trollface

    Oh, the US DoJ won't like this...

    Bets on which big japanese bank is going to be whacked with a $120m fine next week for "causing the financial meltdown" like Deutsche Bank.

  12. Anonymous Coward
    Anonymous Coward

    I can't see how Apple can defend itself. By allowing Apple to avoid paying its fair share of taxes, gives Apple a unfair advantage over its competition

    1. Anonymous Coward
      Anonymous Coward

      Sweetheart deals

      From what I read, the deal between Apple and the Dublin Government was made when Apple was very smalled when compared to the size it is now. Back then it was so small it was irrelevant to the EU in the grand scheme of things.

      Now things are different, very different. The EU is broke. With one of its biggest nett contributors quitting (brexit and all that) any chance they get to fill the coffers they'll take it.

      If Dublin gets their hand of $13B then as usre as eggs is eggs, Brussels will be after getting their share from Dublin.

      IMHO, the best thing Apple could do is pay a sum of money to Dublin and get Dublin to say that the debt is settled. A few billion might make it all go away.

      Then there are the moves in the USA to make any money Apple pays to Dublin not tax deductable. That is clearly Double taxation. That would take a long time to go through the US courts.

      1. Nick Ryan Silver badge

        Re: Sweetheart deals

        This is my understanding of it as well - the low rate was negotiated a long time ago and was an incentive to have Apple base their operations in Ireland largely to bring in jobs in the tech sector - even if it was just for an "also ran" computer company. Where it appears that Ireland fucked up badly is that this wasn't a conditional or periodically reviewed arrangement where once Apples fortunes changed (and they did, very positively) that this tax incentive was renegotiated.

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