Apple ordered to pay $118m tax penalty in Japan for underreporting income in country's iTunes unit

American tech giant Apple has been ordered to pay a $118m (£89m) tax penalty for underreporting income at the Japanese iTunes unit. This is the second tax notice faced by the company since the mammoth $14.6bn bill handed over to it by the European Union (EU) for corporate tax avoidance in Ireland.

The iTunes unit in question has reportedly paid the amount that was asked by the Tokyo Regional Taxation Bureau. According to a Reuters report, the regional tax department argued that the iTunes unit in Japan sends part of its profits earned from fees paid by Japan subscribers to the Apple unit in Ireland. However, this unit had not been paying a withholding tax on these earnings in Japan.

Prior to this Apple has faced tax troubles in other Asian countries like China where the company had to pay $71m in September 2015.

Apple had then claimed that it misinterpret a Chinese tax law which resulted in wrong payments of taxes.

The EU has been a strong critic of US companies like Apple and Starbucks and says these MNCs look to exploit tax loopholes, while the US government floats its own solutions for getting a piece of the huge pie.

To combat such cross-border tax avoidance known as Base Erosion and Profit Shifting, global efforts backed by more than 80 countries is still at an early stage while EU is looking to target more corporations in the coming months.