- Apple is pushing the Indian government for tax relaxations on iPhone machinery ownership to aid its growth
- Current Indian tax laws make US firms liable for taxes on machinery used by contractors
- Apple does not pay taxes on similar machinery provided to contract makers in China
Apple is pushing the Indian government for relaxations in taxation laws surrounding the ownership of high-end iPhone machinery that it gives to its contract manufacturers, news agency Reuters reported.
The tech giant sees the Income Tax Act of 1961 as a hurdle in its future growth as it makes US firm's iPhone profits liable for Indian taxes, even though the machinery is utilised by the manufacturers. The reason for this is that the ownership of the machinery establishes a "business connection" with Apple.
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Contrary to this, Apple does not incur taxes on the machinery it provides to contract manufacturers in China. Therefore, its push for ease in taxes overlaps with attempts to diversify beyond China, in countries like India, as per Reuters.
India is the world's second-largest mobile market. In the context of Apple, its share in the Indian market has doubled to 8% since 2022 while 75% of global iPhone shipments still happen from China.
Sources told Reuters that in the past couple of months, Apple executives have held discussions with Indian government officials to negotiate on revising the law as the company is alarmed against the current legislation hindering its future expansion on Indian soil.
The sources added that contractors will only be able to put up money to a certain extent and that the tweaks in law will benefit India internationally, "If the legacy law is changed, it will become easy for Apple to expand … India can become more competitive globally."
The Indian government is choosing to tread lightly and patiently before coming to a decision on the matter. Reuters quoted one government official as saying that the decision is going to be "a tough call".
Since, even though, Apple's investments are very important to the country, revisions to the law could weaken the government's mechanism to tax a foreign company, and diminish its sovereign right.
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