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

[gnasher729]

It's not clear from the article what app developers can do with respect to pricing.

The app developer can pick one pricing level out of about 90 or so levels. Apple will then set the price for each of 150 or so countries according to the pricing level, the list of prices set is published. The app developer can also choose a reduced pricing level for poor third world countries to support people living there; this will automatically change the price to a huge list of countries. The app developer can _not_ set the price in any individual country.

With subscriptions, the developer can also choose that the prices for existing subscriptions should stay unchanged when the price for new subscriptions increases for any reason.

 

[gnasher729]

But VAT is inherently 'hidden' and is usually not specified on receipts (it's actually discouraged).

What's strongly discouraged is advertising the price without VAT to consumers instead of the price they actually have to pay. In the UK at least, receipts must show the amount of VAT paid, and a consecutive VAT number. It's just when advertising to consumers it's hidden.

Here in the UK, there is Costcos which sells only to businesses, they are allowed to advertise their prices without VAT, because businesses get the VAT refunded, so an item for £100 + £20 VAT effectively costs the business $100.

 

[gnasher729]

Exactly! So why did Apple claim it was irrelevant info when Facebook wanted to inform their users where their money goes?

It is irrelevant to customers because they see the price they pay, and that's it. It is highly relevant to Apple's developers, because it affects how much money they get. For example if you are a UK developer you would be aware if the UK government changes VAT without Apple telling you, but you would be surprised to hear that Germany changes its VAT. And since Apple handles the difference in VAT for you the amount of money you receive from German customers changes.

 

[Wrathard]

Correct, I assumed the credit-invoice method in my example, where businesses send an invoice to the government for a tax credit, which most do.

My examples also take the view point of the business, so yes, in effect the end-customer pays the whole VAT %, but only as it relates to the value added as of the last point in the product chain.

In the $116 example, the tax would be the following:

Sales Tax: The 16% is $16, thus the customer pays $16 on top of $100. Fairly straight forward.

VAT: The 16% is actually $8, based on the retailer's value added of $50. The retailer's cost plus value added comes to $108 ($58 paid to the manufacturer, plus $50 of added value).

But yes, the end-customer still gets left paying the VAT. One of the main criticisms of VAT is what's known as the "last mile" problem. Businesses throughout the product chain have recourse to recoup the cost of paying the VAT, but the end-customer does not (business or otherwise). With sales tax, the tax is known and the end-customer can itemize for a credit at tax time with receipts. But VAT is inherently 'hidden' and is usually not specified on receipts (it's actually discouraged).



That's interesting. It was my understanding that VAT isn't specifically shown on receipts- is that a recent change? Perhaps it's been done to counter the last mile problem as I mentioned above. I know it's been something that VAT countries have been trying to solve.

Just to answer the question, VAT is displayed on receipts and fiscal invoices. By law, it is required to be shown.. not only VAT but also all taxes relevant to the transaction.

I.e.

Base price: $100
VAT 16%: $16
Withholding Tax (in case WHT applies) 4%: -$4
Total: $112

 

[iReality85]

Just to answer the question, VAT is displayed on receipts and fiscal invoices. By law, it is required to be shown.. not only VAT but also all taxes relevant to the transaction.

I.e.

Base price: $100
VAT 16%: $16
Withholding Tax (in case WHT applies) 4%: -$4
Total: $112

Are people like you, me, and the average Joe able to itemize come tax time if they provide VAT receipts then? I would assume that's the case, but each country might be different. It was my understanding that was always the main drawback to VAT, being the end-consumer. Was that a recent change, like in the last 10 years? That actually makes it more similar to sales tax, IMO. Interesting-

 

[kyleh22]

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

lol! but to be fair, they charged sales tax on my laptop and router purchase, FCC tax on my internet, and payroll/income tax on my company time

 

[hot-gril]

We should go back to the days of private fire brigades. Back in the day, in a big city like London you had a choice of fire services. You’d shop around and pick the fire brigade that you decided offered the best value for money. Once you paid their subscription, they’d give you a brass plaque to affix to the front of your building with the name of their fire brigade.

Competition meant that only the leanest and most efficient fire brigades survived, and prices stayed low.

Of course, if the building next door caught fire and the owner wasn’t paid up with a fire brigade, then your own fire brigade, and the competing fire brigades who covered the building on the other side of your neighbor and behind, would stand around and watch the deadbeat’s building burn down.

The only problem with that system (apart from letting the deadbeat’s tenants dire in a fire, but who cares, right?) was that at some point during the conflagration your own building, and those of the deadbeat’s other neighbors, also caught fire, and by that point you had a raging inferno to contend with next door.

While we’re at it, let’s privatize the police and the courts. Administering justice for profit must surely be more efficient than the mess we have now, since “government is not efficient at running ANYTHING.” Pay a subscription fee, and your private police force will respond when you call their number. Pay another subscription, and you’ll be entitled to sue your fire brigade in your chosen court system for letting your building burn down because you were disputing their bill. Pay even more for premium tiers of service, and you can get your court case fast-tracked, or a priority response when calling your private emergency services!

He mentioned efficiency, that's all. That's why the government should focus on the things that really shouldn't be delegated to a private business. Like the environment since they own the land, air, and sea, or public transit since it's a natural monopoly.

Btw, if private fire brigades existed, they wouldn't cover individual buildings, rather an entire neighborhood would have to sign up to one. And many of these fires start in the wilderness, where the government would be the customer.

 

[aaadktda]

It is irrelevant to customers because they see the price they pay, and that's it.

So why does Apple price their phones and other products without various taxes and fees but apps are priced with the fees? If you look at how much an iPhone costs you don't see the price you pay. You see the price without sales tax or VAT.

No matter how you look at it there is a double standard. And this double standard is probably imposed by Apple to avoid being seen as the taxman on the Appstore because nobody likes the taxman. If your Appstore prices are like $10+30% people would feel they pay Apple 30% tax. If you have a price including the Apple fees people scorn the developers for being too greedy when they complain about the fees.

I think Apple is entitled to have the fees as high as they want but it should be more clear who gets what. Look a the discussions about subscription based apps. People complain it's too much to ask $5 a month for an app and that developers are greedy but nobody thinks about the fact that $1.50 is gone from the start.

 

[123]

But VAT is inherently 'hidden' and is usually not specified on receipts

It is always shown (MUST be shown). This also hasn't changed in the last 10 years.

 

[123]

So why does Apple price their phones and other products without various taxes and fees but apps are priced with the fees?

Because they don't. VAT is always included in the prices shown.

 

[siddavis]

We should go back to the days of private fire brigades. Back in the day, in a big city like London you had a choice of fire services. You’d shop around and pick the fire brigade that you decided offered the best value for money. Once you paid their subscription, they’d give you a brass plaque to affix to the front of your building with the name of their fire brigade.

Competition meant that only the leanest and most efficient fire brigades survived, and prices stayed low.

Of course, if the building next door caught fire and the owner wasn’t paid up with a fire brigade, then your own fire brigade, and the competing fire brigades who covered the building on the other side of your neighbor and behind, would stand around and watch the deadbeat’s building burn down.

The only problem with that system (apart from letting the deadbeat’s tenants dire in a fire, but who cares, right?) was that at some point during the conflagration your own building, and those of the deadbeat’s other neighbors, also caught fire, and by that point you had a raging inferno to contend with next door.

While we’re at it, let’s privatize the police and the courts. Administering justice for profit must surely be more efficient than the mess we have now, since “government is not efficient at running ANYTHING.” Pay a subscription fee, and your private police force will respond when you call their number. Pay another subscription, and you’ll be entitled to sue your fire brigade in your chosen court system for letting your building burn down because you were disputing their bill. Pay even more for premium tiers of service, and you can get your court case fast-tracked, or a priority response when calling your private emergency services!

Government's primary function is to protect its citizens. The things you cite are fine uses of taxes. Have you made the case that these services are efficiently run though?

Nowhere in my post did I advocate privatizing anything. I was simply pointing out that a laundry list of "good things" that the benevolent government (/s) "gives us" does not justify more and more of this. It is especially true in America where seizure of private property is the antithesis of liberty and freedom. We should advocate for sticking to the basics and essentials, for the more liberty we cede, the more tyranny we invite.

But please, more hyperbolic stories of days of yore that don't refute the statement of mine that was quoted.

 

[hot-gril]

With a VAT, it is more a sneaky tax paid by the company directly to the government, but the consumer inevitably still pays it ultimately.

What's sneaky is when I buy something advertised as $10 and have to pay $11. Or with flights, $50 really means $90.

 

[aaadktda]

Because they don't. VAT is always included in the prices shown.

Tax and the way it's displayed is different from country to country so your statement is not true. There are people on the first page of the discussion asking what VAT is.

Also let's consider your statement to be true. Please provide a link to a reputable store that sells the iPhone SE (for example) at $399.99, VAT included. That is the price that Apple mentions to customers.

 

[Colonel Blimp]

He mentioned efficiency, that's all. That's why the government should focus on the things that really shouldn't be delegated to a private business....

Government's primary function is to protect its citizens. The things you cite are fine uses of taxes. Have you made the case that these services are efficiently run though?

All large organizations tend to be inefficient. It’s a consequence of size, not of sector; it’s true of governments, churches, non-profit organizations, and, yes, even for-profit companies.

The idea that the free market insures that only the leanest and most efficient companies survive is a fantasy. There is no evolutionary pressure in the free market to be as efficient as possible, only to be efficient enough to survive. As long as a company can keep afloat, it can keep going as lazily and inefficiently as the people who run it and work in it please.

Go work in a large company and then come back here and tell us how efficient it is. When you figure out ways to make your employers’ shareholders more money by reorganizing your department or working harder or smarter (and you will), tell us how receptive your boss and co-workers are to your suggestions.

Btw, if private fire brigades existed, they wouldn't cover individual buildings, rather an entire neighborhood would have to sign up to one....

Private fire brigades did exist, and they did cover individual buildings. If you had stopped to think about it, it would have occurred to you to wonder how “an entire neighborhood would have to sign up to one” without government intervention. Or you could simply have done a few minutes research.

But please, more hyperbolic stories of days of yore that don't refute the statement of mine that was quoted.

The hyperbole surely consisted in your sweeping pronouncement that “government is not efficient at running ANYTHING.”

Out of curiosity, though, let me ask you: do you really think any private company, or even consortium of companies, would have gotten us to the moon more efficiently than the NASA of the 1960s?

 

[4492865]

Tax and the way it's displayed is different from country to country so your statement is not true. There are people on the first page of the discussion asking what VAT is.

Also let's consider your statement to be true. Please provide a link to a reputable store that sells the iPhone SE (for example) at $399.99, VAT included. That is the price that Apple mentions to customers.

In the entire EU, all shops that primarily target consumers - not B2B - MUST include VAT in their pricing. Many countries in Africa do the same. You won't find prices without VAT. Go to any European Apple store and you will see.

 

[gaximus]

Here in Germany? Free education, free Kindergartens in some states, free colleges, great public transport (I said great, not perfect LOL), great road system, free autobahn, great unemployment protection, great social security system, free healthcare system, independent legal system, police, support of art, pensions...

You're using the word "free" a lot, but it's just paid through the tax, so not really free.

 

[123]

Also let's consider your statement to be true. Please provide a link to a reputable store that sells the iPhone SE (for example) at $399.99, VAT included. That is the price that Apple mentions to customers.

What is "$"? In countries that don't have VAT, obviously it is also included as it doesn't exist and is therefore 0.

Are you so ignorant that you think Apple is advertising prices in US USD prices allover the world? Quite ridiculous.

"There are people on the first page of the discussion asking what VAT is" – So??

 

[123]

You're using the word "free" a lot, but it's just paid through the tax, so not really free.

What do I get for the $100 flat fee? Free drinks all evening! No, that's not free, meh meh meh meh meh..

 

[SBlue1]

You're using the word "free" a lot, but it's just paid through the tax, so not really free.

For the kids or the poor who don't pay taxes it is free. Let's take the students. They don't pay the colleges. So everybody no matter how poor can study and contribute to the wealth of all later by paying taxes and keeping the colleges free for the next generation.

 

[cyb3rdud3]

For the kids or the poor who don't pay taxes it is free. Let's take the students. They don't pay the colleges. So everybody no matter how poor can study and contribute to the wealth of all later by paying taxes and keeping the colleges free for the next generation.

Free at the point of use, sure. But it’s not free at all. Us net contributors are paying an obscene amount of money for that to be “free”

 

[Colonel Blimp]

Free at the point of use, sure. But it’s not free at all. Us net contributors are paying an obscene amount of money for that to be “free”

This whole sub-thread arose because one poster said that in his country, they pay 18% VAT and “don’t get sh*t from the government.” This particular train of replies has been made in that context.

Of course services cost money; no one disputes that. The only question is what value you (both you individually and your society as a whole) get for your money. If you want educated people in your society, someone has to pay for that. If you want healthy people in your society, someone has to pay for that. Duh.

Do you want a society where only a wealthy elite can afford a university education? Or where people have to borrow so much to pay for one that all their disposable income after college goes to paying off debt, instead of bolstering the economy by spending and supporting essential public services by paying sales tax?

Do you want a society where people are afraid to quit jobs they aren’t very good at to look for work for which they’re better suited because they’re afraid they’ll lose their health insurance?

Perhaps you do. But that’s the argument we’re having, not whether services cost money to provide.

 

[lartola]

I

Apple today began informing developers of upcoming App Store pricing changes in several countries due to tax changes, with the prices of apps and in-app purchases affected.

Prices are shifting in Chile, Mexico, Saudi Arabia, and Turkey.

• 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%)

According to Apple, developers will see their proceeds from App Store sales adjusted accordingly, with revenue calculated based on the tax-exclusive price.

App Store proceeds will also be adjusted in Germany, France, Italy, and the UK due to tax changes, though App Store pricing will not be shifting.

• Germany: Reduced value-added tax rate from 19% to 16%
• France: New digital services tax of 3% (in addition to the existing value-added tax of 22%)
• 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%)

Developers are able to download updated pricing charts from Apple's developer site to prepare for the upcoming changes. Developers are able to change the prices of apps, subscriptions, and in-app purchases, and can opt to preserve pricing for existing subscribers if desired. Apple says the price changes will go live "in the next few days."

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

I don’t get the part about Mexico. The value-added tax of 16% in Mexico is NOT NEW AT ALL. It has been in place for at least a decade so there should be no change in pricing for Mexico unless the article is wrong and the pricing changes in Mexico are due to some new tax on digital services (which I believe is actually the case). The only change made to value-added tax in recent years was that president AMLO declared a stretch of 20 km (about 12 mi) along the Mexico-US border as a free trade zone and lowered the tax to 8% in that area to equal the amount of sales tax paid on the US side of the border.

UPDATE: I get it now. It turns out digital services were not taxed in Mexico until now, unlike other goods and services in the country. However, a bill changing that was recently approved by congress and now starting June 1st, 2020 they are taxed at the standard VAT rate of 16%. So the 16% rate is old, but applying the tax on digital services is new and that’s why apple had to update the pricing in the appstore. I’m glad I actually use the US Appstore and iTunes and not the ones for Mexico.

 

[siddavis]

All large organizations tend to be inefficient. It’s a consequence of size, not of sector; it’s true of governments, churches, non-profit organizations, and, yes, even for-profit companies.

The idea that the free market insures that only the leanest and most efficient companies survive is a fantasy. There is no evolutionary pressure in the free market to be as efficient as possible, only to be efficient enough to survive. As long as a company can keep afloat, it can keep going as lazily and inefficiently as the people who run it and work in it please.

Nonsense. And if you really believe that inefficiency is a consequence of size, you have wholly made my point. Let's recap, all organizations get inefficient as they get large. Therefore, the logical choice is to continue to grow government and all the parts of our lives that are run by it... with more and more of our money... and... wait for it... less and less efficiency. BRILLIANT!

“There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.”
-Milton Friedman

Go work in a large company and then come back here and tell us how efficient it is. When you figure out ways to make your employers’ shareholders more money by reorganizing your department or working harder or smarter (and you will), tell us how receptive your boss and co-workers are to your suggestions.

I work at a fairly large company. It's funny, my department's entire existence is about working efficiently. Lean Six Sigma, look it up.

The hyperbole surely consisted in your sweeping pronouncement that “government is not efficient at running ANYTHING.”

Fact.

Out of curiosity, though, let me ask you: do you really think any private company, or even consortium of companies, would have gotten us to the moon more efficiently than the NASA of the 1960s?

Aren't we watching that unfold with NASA partnering with SpaceX? You said to the moon more efficiently, not just to the moon. The Apollo program was funded like crazy - more as a % of federal economy than the Manhattan Project. The types here arguing for all this "free" stuff would never go for meaningful efforts like that today.

 

[hot-gril]

All large organizations tend to be inefficient. It’s a consequence of size, not of sector; it’s true of governments, churches, non-profit organizations, and, yes, even for-profit companies.

The idea that the free market insures that only the leanest and most efficient companies survive is a fantasy. There is no evolutionary pressure in the free market to be as efficient as possible, only to be efficient enough to survive. As long as a company can keep afloat, it can keep going as lazily and inefficiently as the people who run it and work in it please.

Go work in a large company and then come back here and tell us how efficient it is. When you figure out ways to make your employers’ shareholders more money by reorganizing your department or working harder or smarter (and you will), tell us how receptive your boss and co-workers are to your suggestions.

I do work in a large company. It's not as efficient as a startup because the employees don't have as much skin in the game or passion for the product. But we have competition like the rest, and we aren't spending $2.5B to build a healthcare website. On the other hand, any monopoly will be inefficient.

Private fire brigades did exist, and they did cover individual buildings. If you had stopped to think about it, it would have occurred to you to wonder how “an entire neighborhood would have to sign up to one” without government intervention. Or you could simply have done a few minutes research.

Yes, I know about London's fire brigades. I didn't say without government intervention. It'd be similar to the law that every car on the road must be (privately) insured, unless an HOA can enforce it.

Btw, there's no reason to talk down to people.

Out of curiosity, though, let me ask you: do you really think any private company, or even consortium of companies, would have gotten us to the moon more efficiently than the NASA of the 1960s?

^ Like he said, SpaceX already goes to the moon more efficiently and is going to be the only reason we get to Mars at any efficiency. They even undercut Russia's rockets, so ex-soviet nations buy from us now. Another prime example was the Human Genome Project. But both were in absence of any real competition, which is unusual.

 

[Colonel Blimp]

Nonsense. And if you really believe that inefficiency is a consequence of size, you have wholly made my point. Let's recap, all organizations get inefficient as they get large. Therefore, the logical choice is to continue to grow government and all the parts of our lives that are run by it... with more and more of our money... and... wait for it... less and less efficiency. BRILLIANT!

That’s an argument against overly centralized government, not against all government at all levels. I would never argue that zoning or traffic planning decisions for, say, Los Angeles should be made in Washington D.C.

I am glad that we have public fire services, and I’d much prefer single-payer health care or a National Health Service to the grotesquely inefficient health care morass we have in the US today. We pay vastly more money for health care in the US than in the social democracies of western Europe, and yet our health outcomes are not that much better. How is that more efficient?

(Edit: The UK’s National Health Service is actually four separate publicly-funded health services, one for each country of the UK, and each accountable to that country's government. And NHS England, for example, is itself comprised of a number of separately-administered trusts. I’m not arguing for large, centralized administration; I doubt anyone here is.)

I work at a fairly large company. It's funny, my department's entire existence is about working efficiently. Lean Six Sigma, look it up.

Then you’ve been lucky. My experience working in larger companies was that they were far from efficient, and that the employees and mid-level managers were more concerned with having a comfortable, stress-free environment than with maximizing the return on their company’s shareholders’ investment.

Perhaps you’ve never read the comic strip Dilbert. It’s enduring popularity is testament to its verisimilitude, and it’s about working in the private tech sector, not in government. A common refrain from readers is that Scott Adams must have spies in their companies, because the absurd inefficiencies he so humorously lampoons are uncannily familiar.

Aren't we watching that unfold with NASA partnering with SpaceX?

No, because the NASA of the 1960s never partnered with SpaceX. I said nothing about the NASA of later decades.

The NASA of the 1960s did partner with a vast panoply of private enterprise, but the Mercury, Gemini, and Apollo programs were all run by the government.

You said to the moon more efficiently, not just to the moon. The Apollo program was funded like crazy - more as a % of federal economy than the Manhattan Project.

That’s a fair point, but remember that the whole goal of the space race was not just getting to the moon, but beating the Soviets there. Doing it slower but more cost-effectively would not have demonstrated the superiority of the American way.

The types here arguing for all this "free" stuff would never go for meaningful efforts like that today.

This one would.