Actually, it's all to do with Apples earnings.. If they weren't earning above £79,000 (I think!) then they wouldn't need to pay VAT and wouldn't need to register for VAT. It's up to Apple, not the consumer.
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App Store and iTunes Prices in UK May Increase Up to 20%
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Actually, it's all to do with Apples earnings.. If they weren't earning above £79,000 (I think!) then they wouldn't need to pay VAT and wouldn't need to register for VAT. It's up to Apple, not the consumer.
Whilst I am generally supportive of Apple, their tax avoidance schemes make me sick.
Along with HP, Dell, Amazon, Paypal, Google. Oh wait, they're all American companies.
Countries such as Luxembourg and Ireland are having a joke at the expense of the rest of the EU countries, charging vastly lower rates of taxation, but the amount of revenue that passes through their books is 100 or even 1000 times what the country is actually due.
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Along with HP, Dell, Amazon, Paypal, Google. Oh wait, they're all American companies.
Countries such as Luxembourg and Ireland are having a joke at the expense of the rest of the EU countries, charging vastly lower rates of taxation, but the amount of revenue that passes through their books is 100 or even 1000 times what the country is actually due.
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Apple will actually lose out whether they absorb the extra UK VAT, or instead pass it onto the customer. Simply because many customers will then choose to download their files illegally after a relatively large price increase.
More people will sign up to rival music streaming services, jailbreak their iPhones for free apps etc.
More people will sign up to rival music streaming services, jailbreak their iPhones for free apps etc.
This isn't a tax avoidance scheme for Apple. VAT is collected on the goods and passed to the govt in the country of sale. The only advantage Apple gains is by selling out of a EU state with a lower VAT rate they can sell goods cheaper to the user and therefore sell more.
Just think of the base song price hypothetically being 50 cent. VAT in one state will go over a euro and in another just under a pound but the amount Apple gains is still only 50 cent per sale. They aren't avoiding tax on sales. The difference in costs is taken by the state to pay for all those public services we use every day - or in this case Luxembourgers enjoy every day ;-)
If we were outside of the EU, as the isolationists and little islanders want, Apple could still sell out of Luxembourg but we would have to pay an additional import tax equivalent to local VAT on top, therefore we would all get taxed twice on our iTunes purchases. The costs to set up a second store outside the Union on declining iTunes sales wouldn'€™t be worth it.
That's why if you read my comment properly, you will see I stated Apple were not the only ones, Google and Amazon are also included.
They are changing the laws because the scandal was brought to light in the media, and the public rightly demanded action.
These companies DO trade in the UK, they employ people in the UK, they should pay UK tax.
Look at these:
http://www.bbc.co.uk/news/magazine-20560359
http://www.bbc.co.uk/news/business-22549434
http://www.theguardian.com/technology/2012/apr/04/amazon-british-operation-corporation-tax
It's been going on for years. They won't stop at this and will hopefully make all the American giants pay their full corporate tax.
Much of that 250 dollars goes to strengthening your long term entitlement system and healthcare, in the United States in theory should use that for paying our healthcare and 401k for retirement.
Personally I think the UK method is much more logical, since you don't double dip your profit, whereas when I put that 250 into my 401k or healthcare payment some of that also goes to another company X to manage/supply. Resulting in actual investment of 150 or so dollars into my personal benefit. No system is perfect but in the United States we send money through many more "middle men" that take their piece.
Why in the world would Apple pay your sales tax? Any company sets the price they want for an item. Sales tax isn't a price increase, it's a charge your government imposed for the privilege to buy something. Don't like it? Complain to the government.
All of these things you demand for free are not free. Corporate taxes are added to product price. Mandatory warrantees are added to product price. 'Free' healthcare is paid for by higher taxes. Anytime you require a company or government to provide a good or service you're going to end up paying for it somewhere.
No, the developer would pay £1.40 and Apple would pay 60p. You don't honestly think that Apple would absorb the full cost do you?
This change is about inter-EU sales. The current system sees Apple pay tax at the rate set by the country they are SELLING from. Naturally, Apple will 'sell' from the country with the lowest tax.
The more complex the tax system, the more likely loopholes will exist.
The more money at stake, the more accountants get paid to find those loopholes.
Simplify the tax system = less/no loopholes!
It is the job of an accountant to legally reduce the tax paid by his employer and no account or company should ever be criticised for doing so. ALL criticism should be directed at the people who make the system. POLITICIANS!!
Yes I know, that's what I said. However over the past four years Osborne has made a number of budget statements about things which has been forgotten or ignored because he found legally he couldn't do it. This is one of those probably worth flagging to the local MEP to look into.
Where in New York are you because I remember paying sales tax on Amazon purchases since '07, which is why I stopped using them.
Here in Denmark we pay around 55%. No riot in the streets here. But i guess it didn't happen in a single day..
I pay national insurance for the national healthcare, has nothing to do with Apple's prices. Not sure if the 20% tax goes on the entitlement system as I have to pay for that with my income tax every pay cheque.
But the US tax system I find to be nuts, I seriously wouldn't want to every year work out how much tax I have to pay. But then again at least you know it'll be accurate?
Here in Denmark we pay around 55%. No riot in the streets here. But i guess it didn't happen in a single day..
Yeah but I suspect you make up for it in other ways though right? You don't pay as much or get taxed as much for other things.
It would be absolutely bunkers if that happened. I agree with you that surely Apple should never do that.
Another way they could do this is to pay 70% of the ex-VAT sum. This essentially means that if the digital content were £1, and:
1. VAT is 5%, the app writer gets 66.67p, Apple gets 28.57p, and the government get 4.76p.
2. VAT is 20%, the app writer gets 58.33p, Apple gets 25p, and the government gets 16.67p.
3. Even in bizzaro world where VAT is 40%, the app writer gets 50p, Apple gets 21.43p, and the government gets 28.57p.
It's worth noting that quite strangely, items selling for $1 on the US Apple Store cost 69p, in the UK Apple Store, which about $1.15, which already is a 15% 'charge' above US prices.
No, it's not. Business class 101: price elasticity. Look it up before making uneducated assumptions.
Why would you think that the app writer would not have to pay some of the tax? and that Apple should pay it all out of their 30%profit, the app writer also makes a profit.
I think i am split over-this decision:
on one side, i feel that tax avoidance by companies like apple, amazon and starbucks is diabolical, given that the customer originated from the uk - a deontological virtue, to pay taxes in a righteous manner
on the other side, this means all my apps will cost me more
Hold on, it's not the companies who are avoiding taxes in this case, but the consumer. VAT and/or sales taxes are paid by the end consumer, and that's us, who've been getting a 'break' so far. I've always suspected that such a 'free ride' would sooner or later come to an end, with the insatiable appetite for tax revenue of governments of all stripes, and not just in the UK.
Without commenting on whether this right or wrong, with this being on the radar of one government, don't be surprised if this will become the norm in most countries before too long. We're talking about billions of potential revenue here, globally speaking.
It's reassuring to know that wherever you are in the world you can still get hold of the Daily Mail.
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