App Store is set to increase the price of apps and in-app purchases in Russia, Brazil, South Africa and Indonesia, including India due to changes in foreign exchange rates. New equalization level of two per cent, in addition to the existing goods and services tax of 18 per cent, will apply to India.
The equalization levy of two per cent was introduced by the Indian government at the end of March on non-resident e-commerce operators offering any e-commerce supply or services. However, this drew criticism from foreign players. The US, in June, announced an investigation under the Trade Act 1974 to look into discrimination against American companies.
An official statement by Apple Inc. said that when taxes or foreign exchange rates change, the company needs to update prices on the App Store. “In the next few days, prices of apps and in-app purchases (excluding auto-renewable subscriptions) will increase in Brazil, Colombia, India, Indonesia, Russia and South africa,” it said. “Prices of apps in-app purchases will also be adjusted in Iceland and Albania to align with pricing used in other markets selling in US dollars with value added tax.”
Once the changes go into effect, Apple said the Pricing and Availability section of My Apps will be updated, and the proceeds will be adjusted accordingly and calculated based on the tax-exclusive price. Developers can change the price of their apps and in-app purchases at anytime in App Store Connect. Navkendar Singh, research director at International Data Corporation, said this won’t have much impact. He said high volume developers might choose to absorb it. “But mostly, this will be passed on to the consumers who really don’t have any alternative to download apps,” Singh explained.
Over the past couple of months, a growing number of app publishers have been voicing for a bigger slice of the pie. Apple takes a 30 per cent cut of app transactions and some publishers are making moves to bypass it entirely, most recent being Fortnite, from Epic Games.