In a move to accommodate the foreign currency exchange rates across different countries, Apple Inc. has decided to increase the rates of in-app purchases and acquiring paid apps from the Apple store. The price rise will be seen in countries such as India, Brazil, Colombia, Indonesia, Russia and South Africa.
Explaining the price rise to partner app developers, Apple has released an internal statement where the company has stated that when foreign exchange rates of different countries change, the pricing of apps have to be modified. Pricing is going to be changed in Iceland and Albania to accommodate foreign currency rates and additional value added taxes.
The smartphone manufacturer has declared that the existing levy of 18% goods and service taxes (GST) will see an increase of 2% additional taxes of equalisation levy. The equalization levy was introduced in 2016 by the government as a direct tax levied on foreign technology companies on the revenue earned by them through digital transactions and payments. Under the Finance Act 2020 brought into effect by the government of India from April 1 this year, an equalisation levy of 2 percent was taxed on foreign tech innovation ventures such as Apple and e-commerce platforms under the 165A section of the act.
While the increase in app prices in India has been only 2%, app developers of Indonesia will be bearing the brunt of an additional tax of 10 percent.
The new chart of pricing will be updated on the official Apple website for app developers in the Apple Developer portal and in the pricing and availability section once the price rise comes into effect. The updated prices are expected to be implemented within the next few weeks. The partner app developers can update their app price rates and in-app purchase rates once the new prices are officially in effect. This can be done through the App Store Connect platform.
While the updated prices will be in effect for third-party apps, it is unclear whether Apple plans to implement the same price rise strategy for its own app services such as Apple Music, iCloud and Apple TV+ subscriptions.
Apple will soon update its customers about the concrete plan of price change once the new pricing strategy is put into effect by the app developers. App developers have been provided with an updated price chart for apps available on Apple Store and it has also been stated that the minimum price of apps will be enhanced to a bar of Rs 89, which is a higher cap as compared to the minimum price of Rs 80 that Apple decided in 2017. Given the rise in the Apple App Store rates and the associated in-app purchases at its partner apps, using apps in iPhones will be costlier than before for existing and new iPhone users in India. As iPhone users majorly belong to the richer sections of the country and are sold on the brand value of Apple, the 2% rise in the app prices is not expected to make much of a difference on the user percentage of the smartphone.
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