Apple is pressing India’s government to revise its income tax rules, aiming to dodge taxes on the premium iPhone manufacturing equipment it supplies to partners — a roadblock that’s stalling the tech giant’s growth ambitions there, according to Reuters‘ sources.
Aditya Kalra, Nikunj Ohri, and Aditi Shah for Reuters:
Apple’s contract manufacturers Foxconn and Tata have pumped in billions of dollars to open five plants, but millions of those expenses go into acquiring pricey machines for iPhone assembly.
Experts say Apple potentially faces billions of dollars in additional taxes if it changes its business practices without convincing New Delhi to change a 1961 law covering foreign ownership of equipment used in India.
In China, Apple procures the machines used to make iPhones and gives them to its contract manufacturers, and is not subject to tax even though it still owns them.
But that’s not possible in India as the Income Tax Act would consider such ownership by Apple as a so-called “business connection,” making the U.S. firm’s iPhone profits liable for Indian taxes, said a senior government official and two other industry sources.
Apple executives have held talks with the Indian officials in recent months to tweak the law as it fears the current legislation could hamper its future growth, said the sources.
MacDailyNews Take: India should remove this roadblock that’s impeding Apple’s investment in the country.
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