Tech giant Apple has once again raised the prices of its apps and in-app purchases, this time in response to India’s new equalization levy and to tax developments in other countries.
In an October 26 post on its developer site, Apple confirmed the App Store price increase reflects India’s March decision to impose a new 2 percent tax on nonresident e-commerce revenues from the sale of goods and services to Indian consumers.
The tax took effect April 1 after India’s Parliament approved an amendment to Finance Bill 2020 on March 23. It expanded India’s equalization levy regime and took the business sector by surprise because the measure was not included in the original finance bill legislation and only appeared when the Finance Act passed Parliament.
Developer proceeds “will be adjusted accordingly and calculated based on the tax-exclusive price,” according to the post. However, developers would be able to change the prices of their apps and in-app purchases, as well as auto-renewable subscriptions, the post adds.
The move comes shortly after Apple announced on September 1 it would make similar price adjustments in countries including Turkey, whose revenue-based 7.5 percent digital services tax took effect March 1.
Apple joins the likes of Amazon and Google, which have also recently announced fee adjustments in other countries that have DSTs.
Digital taxes such as India’s equalization levy and Turkey’s DST have become especially controversial in recent years. Governments, frustrated by their inability to tax digital companies that lack physical presence in their jurisdictions, have introduced them as temporary measures while multilateral negotiations continue through the OECD framework for agreement on a coordinated approach for updating international corporate tax rules for the digital age.
Countries had hoped to reach an accord by the end of 2020, but the timeline was delayed to mid-2021 because of the COVID-19 pandemic and political difficulties.
In the meantime, the United States, which has said DSTs discriminate against U.S. companies, has threatened to impose trade sanctions on countries that pursue them, stoking fears of an international trade war.
The Office of the U.S. Trade Representative announced in June it was starting a section 301 investigation into the Indian equalization levy and the Turkish DST, along with the digital tax plans of eight other trading partners. The United States is also poised to slap 25 percent tariffs on French imports in January 2021, after France announced it would resume collection of its 3 percent DST in mid-December.
However, U.S. trade threats have not deterred other countries from moving ahead with DSTs. The Spanish Parliament passed legislation on October 7 for a 3 percent DST to take effect in January 2021.
Apple also plans on adjusting App Store prices in Indonesia in response to a new VAT of 10 percent aimed at developers outside the country, according to the post. Indonesia had announced in August that it would require Apple to collect and remit 10 percent VAT on sales of digital products and services to Indonesian customers. The move is in line with the government’s May announcement that it would impose VAT on digital goods and services sold by nonresident companies.