Apple hit with $118mn tax bill in Japan after funneling money through Ireland

Apple’s tax bills continue to mount after yet another multi-million penalty was handed down to an iTunes unit in Japan. A total of $118 million (12 billion yen) is owed after it was found the company was funneling money through Ireland.

After investigating the company, the Tokyo Regional Taxation Bureau found that the royalties earned from fees paid by Apple iTunes subscribers in Japan were withheld from the exchequer, with the money instead channeled through a licensing firm owned by Apple in the Republic of Ireland.

The royalties earned should have been subject to a 20.42 per cent withholding tax but instead, as the royalties were earned through iTunes software built into the iPhone, the money was included into the cost of buying an iPhone handset, according to FT.

Through the intricate tax avoidance system in place, Apple is then able to funnel these royalty payments into their Irish holding company, where they are subject to very low tax.

Apple have refused to comment on the tax bill, saying it doesn’t discuss specific cases, according to FT. The company wasn’t slow to find the funds, however, with reports indicating that the money has already been paid.

In August, the European Commission ruled that Apple owed the Irish government up to €13 billion ($14.6 billion) to cover the unpaid tax.

READ MORE: Apple ordered to repay record €13bn to cover unpaid EU tax

It was the found that the company had received "selective treatment" which had allowed them pay a tax rate of one percent on EU profits in 2003 down to 0.005 percent in 2014.

Both Apple and the Irish government have signaled plans to appeal the ruling, claiming no laws had been broken.