This definitely doesn’t help the indie developers on the App Store.
What you need to know
- There’s controversial new tax and foreign exchange rate changes in certain regions.
- Apple is adjusting the proceeds of apps and in-app purchases accordingly.
- The cost of such changes are going to hit the developers.
In some parts of the world, there are changes to tax and foreign exchange rates for digital sales, and Apple will be adjusting App Store prices accordingly. These changes will begin to rollout in the next few days. Developers are going to be the ones that will be taking the hit for these increased tax and foreign exchange rates, unfortunately, as the prices on the App Store will not change.
In the regions of Chile, Mexico, Saudi Arabia, and Turkey, the tax rates have increased. Proceeds to developers will be adjusted accordingly and will be calculated based on the tax-exclusive price.
- Chile: New value-added tax of 19%
- Mexico: New value-added tax of 16%
- Saudi Arabia: Increase in value-added tax from 5% to 15%
- Turkey: New digital services tax of 7.5% (in addition to the existing value-added tax of 18%)
For Germany, France, Italy, and the United Kingdom, proceeds will also be adjusted accordingly based on the tax-exclusive price. Again, prices on the App Store will not change — the developers will be taking the hit for these changes.
- Germany: Reduced value-added tax rate from 19% to 16% (effective July 2020)
- France: New digital services tax of 3% (in addition to the existing value-added tax of 20%)
- Italy: New digital services tax of 3% (in addition to the existing value-added tax of 22%)
- United Kingdom: New digital services tax of 2% (in addition to the existing value-added tax of 20%)
Apple will be issuing automatic refunds on a monthly basis to customers with auto-renewable subscriptions who are located in Germany, effective July 2020, in order to account for the tax reduction. These refunds will not affect developer proceeds.
For any developer who is interested in the updated price tier charts, you can download those directly from Apple. Once the changes take place, the Pricing and Availability section of My Apps in the Developer portal will be updated. If developers want to change the price of their apps or in-app purchases, including auto-renewable subscriptions, it can be done at any time in App Store Connect. For those who are offering subscriptions, developers can choose to preserve pricing for existing subscribers.
Unfortunately, the biggest drawback of these changes is the fact that Apple is passing the cost of these rate changes to the developers. This will no doubt hurt the smaller indie devs more, who are already struggling in the App Store when compared to big name developers and publishers.