Apple will fix unfair commission for South Korea developers

Posted:
in iOS
South Korea's Fair Trade Commission says that Apple will address a loophole that saw local developers being effectively required to pay 33% commission to the company.




With some exceptions, developers are required to pay 30% commission to Apple for all App Store sales. However, in South Korea, they have been charged on not the price of the app, but that price plus the 10% local value added tax (VAT).

Consequently, the fees to Apple have worked out to be the equivalent of paying a 33% commission. Following developers reporting this to the FTC, the regulator raided Apple's local offices in September 2022.

The Times of India says that the chair of the Fair Trade Commission (FTC), Han Ki-jeong, has told reporters that the issue may now be resolved.

"In September, the FTC promptly launched a probe following reports that Apple charges unfair commissions on only local app developers," he said. "Recently, Apple said it will voluntarily correct the problematic action by January next year."

"Should Apple fix it well," Han continued, "it will ease difficulties for domestic app developers to some extent."

It's not clear why Han believes this, because the net beneficial effect to developers is near-zero, if there are benefits at all. The taxes are still due, and now the onus is on the developers to pay them directly.

Separately, South Korea regulators are investigating both Apple and Google over alleged violations of local in-app payment laws.

Read on AppleInsider

Comments

  • Reply 1 of 4
    Was Apple taking advantage of float?
    watto_cobragrandact73
  • Reply 2 of 4
    The taxes are still due, and now the onus is on the developers to pay them directly.

    You make it sound like a benefit - that Apple was paying the tax for them. Well, VAT tax returns always need to be filed, and it’s most likely there’s always a payment to be made not related to the App Store - but perhaps the return is now more complicated - having to account for income in which the VAT is already paid! 
    FileMakerFellerwatto_cobra
  • Reply 3 of 4
    carnegiecarnegie Posts: 1,016member
    AppleInsider said:
    ...

    It's not clear why Han believes this, because the net beneficial effect to developers is near-zero, if there are benefits at all. The taxes are still due, and now the onus is on the developers to pay them directly.

    ...
    If I understand what I've read correctly, developers shouldn't owe any additional VAT. Apple will already have paid that.


    The accusation was that Apple was, essentially, doing something like this:

    Collecting $11 for an app with a ex-VAT price of $10. The extra $1 was for the VAT.

    Keeping 30% of the total $11 ($3.30) for itself.

    Giving the $1 in taxes to the appropriate tax authority.

    Giving the remaining $6.70 (67% of the ex-VAT price of the app) to the developer.


    In effect, Apple was charging the developer not only a 30% commission on the $10 price of the app, but also a 30% commission for handling the $1 in VAT. Put another way, Apple was keeping an amount equal to 33%, rather than 30%, of the ex-VAT price which it was splitting with the developer. Fixing that would mean Apple would keep 30% of the ex-VAT price rather than 30% of the VAT-included price.
    edited November 2022 FileMakerFellerwatto_cobraxyzzy01muthuk_vanalingam
  • Reply 4 of 4
    Was Apple taking advantage of float?
    They'd be crazy not to. But as long as the amount of tax actually paid to the government was correct (that is, the developers weren't paying the government separately/additionally for the tax amount that Apple collected) I think this one can be classified as an unfortunate accident and not a malicious act.
    watto_cobra
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