Apple Pays China $71 Million in Back Taxes

The company blames a "difference in interpretation of a tax rule" for the underpayment of taxes in China.
Katie Kuehner-HebertSeptember 11, 2015

Apple has paid more than $80 million in back taxes and fines to China after understating its sales in the country in 2013 by $1.4 billion.

China’s Ministry of Finance announced the underpayment, saying it leveled a $10 million fine on top of the $71 million that Apple owed in back taxes. The company also overstated its profit for 2013 by $820 million.

“During an audit of our 2013 operations, a difference in interpretation of a tax rule resulted in a balance due, which we paid with interest,” Apple spokesman Josh Rosenstock told CNN. “We pay all the taxes we owe wherever we do business and we will continue working closely with the Ministry of Finance.”

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As Reuters reports, Beijing has been taking a hard line on foreign firms underpaying taxes after authorities said in December they would crack down on the practice. China levied around $140 million in back taxes from Microsoft at the end of last year.

“Apple is no stranger to controversy about taxes,” CNN wrote, noting that it could be forced to pay a decade’s worth of back taxes to Ireland, following a European Commission probe of Apple’s 1991 tax deal with the country.

The company is now the No. 3 smartphone brand in China, behind Xiaomi and Huawei.