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Apple warning developers about new Chinese, Japanese taxes
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NewsPoster
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Sep 30, 2015, 08:23 AM
 
Apple has informed developers of new tax application on sold apps in China and Japan. The iTunes connect briefing warns of "transactional taxes in China" as well as new tax laws in Japan "with respect to foreign businesses that provide electronic commerce to residents of the country." The taxes applied are in addition to any of those owed already, due to state or country of residence, and a discussion has begun between developers on whether to abandon the localities entirely.

Apple will begin withholding taxes from developers' app sales. The Japanese Consumption Tax is set at eight percent. The transactional taxes in China will vary based on sales volume, and a calculator is available through iTunes Connect for developers. MacNN has spoken to a handful of developers who are considering retracting their apps from the countries because of the taxation above and beyond what would have to be paid in their native countries. Two we spoke with already have.

Taxes are applied to purchases first, before Apple takes its cut for developers residing outside of those countries. Both in-app purchases and application sale revenues are taxable at the same rate in both countries.


( Last edited by NewsPoster; Oct 1, 2015 at 06:06 AM. )
     
Inkling
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Sep 30, 2015, 09:08 AM
 
Sounds like these are European-like value-added taxes which, rather than being added to the purchase price when sold, are extracted from the amount the developer would otherwise receive. Unlike sales taxes, they're hidden from consumers, so they can be quite high. In some European countries they run as high as 25%. The 8% that Japan is charging is quite low but could easily be raised.
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Mike Wuerthele
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Sep 30, 2015, 10:47 AM
 
In several documents I found about the Japanese taxes, they're discussing that on an ongoing basis. Thing is, you're getting hosed if you're in the UK, and selling to a Japanese customer. Double taxation.
     
drbenru
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Sep 30, 2015, 11:04 AM
 
It's only double taxation if you are taxed on the untaxed cost of the purchase in your home country. If you're only taxed on actual revenue (after Japan/China tax) then its no different than a tax added to purchase, like the 8.75% sales tax here in Louisiana. If it is like a sales tax, developers can simply raise the price to offset the tax in those countries.
     
Lynn_Fredricks
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Sep 30, 2015, 11:43 AM
 
Japanese consumption tax is a national tax that's inched up since the late '80s. Unless I am misreading, the 8% is taken out of the gross sale, and then the 70%/30% split is applied to net. While I would much rather have it applied like sales tax (ie Apple increases the price by 8% rather than taking it out of the gross sale), its not that big a deal. If you are selling Mac OS X apps from your own site and have no tax nexus in Japan, then you don't have to worry about that. You aren't depending entirely on a third party (Apple) for all of your sales, are you?
     
Mike Wuerthele
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Sep 30, 2015, 12:00 PM
 
If you're an iOS-only developer, you don't have loads of choices.
     
Inkling
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Sep 30, 2015, 03:51 PM
 
I just got an email from the iBooks team and this tax does apply to ebooks on the iBookstore. What's confusing is this remark in the email: "Under the new laws, you may now have to collect and pay Japanese consumption tax (at current rate of 8%) on books that you sell to Japanese customers on iBooks." in comparison to the remark above: "Apple will begin withholding taxes from developers' app sales." This is crazy. Who pays? Why is this coming out the day before it takes effect? And when I called iBookstore support, the know nothing about it. The Japanese government isn't any help. Their webpage on this is almost unreadable: http://www.mof.go.jp/english/tax_policy/tax_reform/fy2015/tax2015ct.htm MacNN would do us all a favor if they clarified what is happening with Apple's tax lawyers.
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Inkling
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Sep 30, 2015, 04:08 PM
 
Amazon was on to this Japanese tax at the end of August. Here's what Goodread has to say about Amazon's policy. http://goodereader.com/blog/e-book-news/8-tax-will-be-applied-to-all-kindle-ebooks-in-japan In this situation, Amazon isn't raising ebook prices like it did with the European VATs. Developers, authors and Amazon will absorb that 8% out of their income from apps and ebooks. Amazon is doing the deducting and paying, so developers and authors are spared that headache. If Amazon is doing that, I can't see any reason why Apple can't. I don't know how Apple got into the last-minute muddle.
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Mike Wuerthele
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Sep 30, 2015, 04:38 PM
 
Okay, I made some calls.

1) I've been told from inside the company that Apple is collecting the tax from the proceeds.
2) I've also been told that my source had no idea that this was happening until he got a memo about it today.
3) Yes, the taxes are coming out of the content producers' share, not Apple's.

That's what I've got, but it may change, given that it seems that nobody knows what the heck is going on about it.
     
Spheric Harlot
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Oct 1, 2015, 04:41 PM
 
Originally Posted by Mike Wuerthele View Post
3) Yes, the taxes are coming out of the content producers' share, not Apple's.
The taxes have to be coming out of BOTH the content producers' share, not just Apples. Taxes apply to final sales price, not arbitrary split portions of the royalty. The government knows nothing about these.

Or are you saying that Apple is only paying out 62% of the total sales price vs. 70% before, and still keeping their 30% cut? That would be bizarre.
     
Mike Wuerthele
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Oct 1, 2015, 05:30 PM
 
I'm not saying ANYTHING, here. I'm just passing along what I was told. I've still got some questions awaiting answers.
     
   
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