All of the suppliers to Foxconn, who makes the Iphone, have to pay a 17% VAT for all materials. This tax applies all through the supply chain from raw material to finished products. If the product is shipped out of China then the VAT is refunded, but if the product is still sold in CHina the VAT still applies. Same as other products, not just Apple. Then the government applies other taxes on the manufacturers which get passed along to the Chinese consumer. The VAT system is cumbersome and difficult to manage.