Small developers operating outside of Japan can be tough to get ahold of for owed consumption tax payments, so the Finance Ministry is placing the burden on Apple and other app market operators.
Mobile app markets like Apple’s App Store continue to grow in Japan, which means there’s an ever-increasing amount of revenue that needs to be taxed. However, the country has difficulty collecting taxes on every sale that warrants it.
According to a report from Nikkei Asia, Japan’s Finance Ministry is making app store operators like Apple and Google responsible for paying consumption taxes owed by foreign developers. These changes won’t go into effect until 2025 to give companies time to adapt.
The idea is that Apple and Google know how much money their respective app stores made within Japan. So, the companies would know how much consumption tax is owed to Japan and pay it in full.
The current consumption tax is 10%, which Apple would pass to its developers. So, for example, on top of Apple’s 15% to 30% revenue share on App Store sales and subscriptions, Apple would add 10% on top to pay for the consumption tax in Japan.
Developers would then need to adjust prices to account for this price increase. Some developers were already paying the tax appropriately, so this shouldn’t affect their annual income.
Apple has been hit with fines over not handling the consumption tax properly before. It owed $98 million in 2022 for incorrectly exempting tourists and resellers from the consumption tax.