China has accused Apple’s local subsidiary of underpaying $70m in taxes by underwriting some of the costs.
A report from the country’s finance ministry revealed that Apple Computer Trading (Shanghai) failed to pay CNY452m (more than $70m) in due taxes by the end of 2013.
It included maintenance expenses into pre-tax deductions. State-run Xinhua news agency has however reported that the company paid back the taxes and CNY65m in late fees.
The report also accused the company of under-reporting CNY8.8bn of revenue and CNY3.45bn of costs along with CNY5.35bn of profit.
A spokesman for Apple was quoted by Reuters as saying, "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. We pay all the taxes we owe wherever we do business."
Apple’s products enjoy a better market share in China and the Greater China region is the company’s second-largest market after the US.
The company’s iPhone sales have increased 85% in Greater China, which includes Taiwan and Hong Kong.
China is currently Apple’s largest overseas market and the base for majority of its manufacturing activities.