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Apple China hit with $10 million fine after underpaying taxes

The Californian tech giant's Chinese subsidiary was made to cough up around $80 million after underpaying its tax in 2013.

James Martin/CNET

On Wednesday Apple's CEO Tim Cook proudly proclaimed that the company's market in China had grown by 75 percent in the past year. Unfortunately though, not all news from the People's Republic has been positive this week.

On Thursday, Xinhua News Agency, the country's official press publication, reported that the Minister of Finance ordered Apple to cough up 452 million yuan ($71 million) that the company failed to pay in tax in 2013. It added that the Californian tech giant has paid a 65 million yuan ($10 million) fine in addition to the tax money owed.

According to Xinhua, Apple's Chinese subsidiary had improperly listed its revenues and costs in 2013, understating them by 8.8 billion yuan ($1.4 million) and 3.4 billion yuan ($532,000) respectively. It also inflated its posted profits by 5.4 billion yuan ($846,000).

An Apple spokesman told CNBC that 2013's improper payment was due to "a difference in interpretation of a tax rule," adding that the balance was paid "with interest" and that the company pays "all the taxes we owe wherever we do business."

China has been tightening its grip on tax collection over the past year. Last November its government levied $137 million from Microsoft, and in February, the country implemented policies that increased scrutiny on the tax paid by transnational corporations.

Apple's iPhone 6 and 6 Plus shook up the Chinese market last year, which is the company's second biggest market behind the Americas.

Apple did not immediately respond to request for comment.