Apple Raising App Store Prices in Chile, Mexico, Saudi Arabia and Turkey Due to Tax Changes

[gaximus]

Either American, or clueless. Just go on the Apple website where they sell computers. Then go to the UK site, and you will see how every single price has VAT included. Go to Amazon.co.uk, and you will see how every single thing you can buy has VAT included. Go to any random store website, and you'll see how every little thing has VAT included.

Apple.uk has the 256gb iPhone SE for £569, with current conversion at 1.39 that comes to $761 while listed in the US at $549. The UK site says it includes VAT at £95($127). You are correct VAT is included but they are increasing the price for the end customer.

 

[TiggrToo]

Ah, you didn't read the full article did you? Just commented on the title.

Reading is so difficult these days.

 

[siddavis]

The US should really employ a federal VAT or something similar — a tax that would go directly to reducing debt.

Not if our politicians continue to spend like drunken sailors. Revenue is not the problem. Check it year over year. Stop out of control spending and we can reduce the debt.

 

[Kierkegaarden]

Read what I wrote again. Then come back and we’ll talk.

it‘s not about VAT. But about the digital tax. What‘s the idea about that?

It’s an additional VAT, just repackaged. They could have raised the VAT, but having a separate low rate looks better. It makes sense to me. Taxing a broad base at a low rate at the point of sale is better than relying on people to report their income honestly.

 

[TiggrToo]

Apple.uk has the 256gb iPhone SE for £569, with current conversion at 1.39 that comes to $761 while listed in the US at $549. The UK site says it includes VAT at £95($127). You are correct VAT is included but they are increasing the price for the end customer.

You can't just do a simple 1:1 conversion: there's a **** ton of other fees and levies each country has that can change the base pre-tax price.

 

[Kierkegaarden]

Not if our politicians continue to spend like drunken sailors. Revenue is not the problem. Check it year over year. Stop out of control spending and we can reduce the debt.

Good point. I think a combination — cut spending and raise consumption taxes.

 

[CCPisFascism]

You mean customers pay the taxes levied on corporations?

 

[hot-gril]

It’s an additional VAT, just repackaged. They could have raised the VAT, but having a separate low rate looks better. It makes sense to me. Taxing a broad base at a low rate at the point of sale is better than relying on people to report their income honestly.

VAT sounds strictly better, but I just wonder how much administrative overhead it creates, and I don't like the fact that they can realistically enforce >10% sales tax with it.

 

[bsolar]

The tax amount and structure is still the same, looks like the enforcement is just different. They can realistically enforce 16% VAT, but that doesn't make it lower than a 16% sales tax.

Even if the tax rate is exactly the same percentage, a VAT does not incur in the cascade effect the same way a plain sales tax does, meaning that overall it's effectively less severe than the same-rate plain sales tax.

Ultimately it looks like a sales tax but works differently and has different characteristics. I suggest reading the Wikipedia article I posted above where there is a detailed explanation about how it works and a comparison with income tax and sales tax.

 

[Wildkraut]

Bwahaha, due to tax changes, as if they pay tax...

Double Irish With a Dutch Sandwich!

 

[iReality85]

VAT and Sales Tax while conceptually different, are the same for the end customer.

If an item is sold for $100 w/ a 16% sales tax the customer pays $116.

If an item is sold for $100 w/ a 16% VAT the customer still pays $116.

Who collects and pays govt. is irrelevant. End customer gets charged the same whether it's Sales Tax or VAT.

Your example is overly simplistic, and in that case VAT actually acts just like sales tax: in direct-to-customer (aka farm-to-market) sales. Supplier collects tax from customer, and supplier pays tax to government. But most goods have product chains, and that’s where VAT is significantly different from sales tax.

In your $116 example, let’s say there’s 4 steps involved in the chain:

1. Supplier
2. Manufacturer
3. Retailer
4. Customer

Your item costs the supplier $10 plus VAT 16%. The supplier charges the manufacturer $11.60, and pays $1.60 to the government.

The manufacturer then sells the item to the retailer for $58 (includes 16% VAT). But, the supplier already charged and collected $1.60 of that tax and paid it to the government, so the real portion of the VAT tax on the sale price is now $6.40 (the $1.60 became cost), which comes from the added value that the manufacturer sold the item for to the retailer (16% of $40).

The retailer then sells the item to the end-customer for $116 (includes 16% VAT). But, the manufacturer already paid $6.40 to the government, and the supplier already paid $1.60 to the government, so the real portion of the VAT tax on the sale price is now $8 (the other $8 became cost), which comes from the added value that the retailer sold the item for to the customer (16% of $50).

$1.60 + $6.40 + $8 = $16. Again, it’s called value added tax for a reason, and the real tax portion of VAT to the end customer can be affected by how long the product chain is, to how much of a markup sellers are commanding. It’s also why the relative cost of goods are more expensive in VAT economies because those taxes become costs to businesses, for better or worse.

(Edited for clarity)

 

[ppetrovic]

If im not correct, if your outside of the US and download a app, the tax (VAT) is based not on your Apple account address in the US but the IP address to where the app is being downloaded from. So you would subject to the local VAT. Someone correct me if im wrong.

You’re wrong. If your App Store region is set to the US, you’ll pay the sales tax (if applicable) depending on your physical address Apple has on file for your Apple ID no matter whether you’re out of the country or not.

However, if you change the App Store region to outside the US (and manage to associate the appropriate payment method for the new region since US-issued CCs wouldn’t work in your new region) you’ll be charged VAT in accordance with local rates even if you happen to be in the US at the time of purchase.

 

[hot-gril]

Even if the tax rate is exactly the same percentage, a VAT does not incur in the cascade effect the same way a plain sales tax does, meaning that overall it's effectively less severe than the same-rate plain sales tax.

Ultimately it looks like a sales tax but works differently and has different characteristics. I suggest reading the Wikipedia article I posted above where there is a detailed explanation about how it works and a comparison with income tax and sales tax.

https://en.wikipedia.org/wiki/Value-added_tax#Examples has good diagrams. X% VAT results in the government taxing the same amount of money overall as an X% sales tax. The same article mentions the cascading effect, but I don't see one here... sales tax only applies to the final buyer, not all stages of production.

Btw, I'm not defending sales tax. VAT looks better overall. Just saying, 16% VAT is the same burden as 16% sales tax.

 

[MauiPa]

Apple is hungry for $$$ .
2 Trillion isn’t enough.

That literally makes no sense. Countries tax services, who do you think pays those taxes? Always the consumer. Just like the infamous tariffs here in the US, despite lies to the contrary, the consumer pays those taxes.

 

[hot-gril]

That literally makes no sense. Countries tax services, who do you think pays those taxes? Always the consumer. Just like the infamous tariffs here in the US, despite lies to the contrary, the consumer pays those taxes.

The consumer doesn't pay the full tax, nor do they pay 0 of it, but somewhere in between depending on the product. https://en.wikipedia.org/wiki/Price_elasticity_of_demand#Effect_on_tax_incidence will show this better than I can, but tl;dr, they tend to pay less of the tax if the product is less necessary / more luxury.

 

[Wrathard]

Your example is overly simplistic, and in that case VAT actually acts just like sales tax: in direct-to-customer (aka farm-to-market) sales. Supplier collects tax from customer, and supplier pays tax to government. But most goods have product chains, and that’s where VAT is significantly different from sales tax.

In your $116 example, let’s say there’s 4 steps involved in the chain:

1. Supplier
2. Manufacturer
3. Retailer
4. Customer

Your item costs the supplier $10 plus $1.60 VAT. The supplier charges the manufacturer $11.60, and pays $1.60 to the government.

The manufacturer then sells the item for $50 plus $8 VAT. The manufacturer charges the retailer $58. But, the supplier already charged and collected $1.60 of that tax and paid it to the government, so the real portion of the VAT tax on the sale price is now $6.40 (the $1.60 became cost), which comes from the added value that the manufacturer sold the item for to the retailer (16% of $40).

The retailer then sells the item for $100 plus $16 VAT. The retailer charges the customer $116. But, the manufacturer already paid $6.40 to the government, and the supplier already paid $1.60 to the government, so the real portion of the VAT tax on the sale price is now $8 (the other $8 became cost), which comes from the added value that the retailer sold the item for to the customer (16% of $50).

$1.60 + $6.40 + $8 = $16. Again, it’s called value added tax for a reason, and the real tax portion of VAT to the end customer can be affected by how long the product chain is, to how much of a markup sellers are commanding. It’s also why the relative cost of goods are more expensive in VAT economies because those taxes become costs to businesses, for better or worse.

I agree with you and your example is nicely put; nonetheless, at the end of the day VAT and sales tax raise the same amount of revenue; the difference is at what point cash is paid and by whom. Delta is just it is paid at different stops along the supply chain.

Gross margins / turnover remains the same across the chain, regardless of how long it is. In all your examples the buyer (exc. end customer) has a balance sheet prepaid VAT account which is used to offset liabilities' fiscal debit that raises from VAT on revenue which keep margins unaffected - in some jurisdictions you can apply for VAT refund whenever your taxable purchases exceeds your taxable revenues. Some countries go even further allowing universal tax applications allowing for VAT credits to be applied to income tax and even complementary dividend taxes.

 

[Colonel Blimp]

Governments find a way to tax everything....

Everything? Luckily for you, they don’t tax exaggerated forum comments.

 

[ani4ani]

is this the new ‚let’s take the money from the big bad internet companies that make so much money without us being able to fill our pockets‘ thinking?

meanwhile, BigInternetCompany:
‚Hold my beer, I’m just passing the tax along and the government squeezes the money out of their citizens‘

sounds legit...

what’s not legit is big fruit logo carrying company that makes 60%+ of its profits outside of North America but only pays 4% of its tax outside of North America.

 

[aaesta]

Useless tax $ to fund the “government”. It goes back into the pockets of politicians. Imagine if this happened in the US? There would be an up roar .. welcome to America!

 

[wouwout]

25% tax?!? Parts of Europe have gone insane. Robbery

 

[wouwout]

VAT is 20% in France, not the 22% stated in the article. The 3% digital services tax is being introduced because of fiscal dumping within the EU which allows Apple to pay hardly any company taxes on profits originating in France.

So you are paying for Apple's tax evasion??

 

[aaadktda]

So why is Apple informing people about this? Why don't they just go ahead and do it without saying anything to anyone. Not now, not ever. What happened to the "irrelevant" info stance about taxation and fees used to force Facebook to modify that tiny text informing people about Apple getting 30% of the amount?

 

[7149041]

Its sales tax. It’s 19% in Germany. If you see the number it surely seems high but when you see what you get for your taxes it’s ok again.

It’s 23% in Poland and we don’t get sh*t from the government 😂
[automerge]1599019051[/automerge]

So why is Apple informing people about this? Why don't they just go ahead and do it without saying anything to anyone. Not now, not ever. What happened to the "irrelevant" info

They are informing the developers, not the general public

 

[7149041]

You are correct VAT is included but they are increasing the price for the end customer.

Exactly, VAT is “passed on” to the final buyer, businesses don’t really pay it. So basicaly everything in EU is some 20% more expensive than US, including software licenses. Unless you own/are a business and can do VAT deduction (ie pass it on to your customers).

 

[aaadktda]

It’s 23% in Poland and we don’t get sh*t from the government 😂
[automerge]1599019051[/automerge]


They are informing the developers, not the general public

Facebook was informing people making a purchase, not the general public.