New digital tax hits Apple App Store in SA: report

Apple has informed app developers of a change to pricing in the App Store for South Africa to account for the 14% value added tax (VAT) now being charged on digital goods.

This is according to a report on 9to5Mac, which embedded a screenshot of the e-mailed notice (shown below) in its article.

Prices on the South African App Store will change to reflect the new tax requirements within the next 24 hours, according to the report.

VAT on digital goods sold in South Africa came into effect on Sunday, 1 June 2014 as per regulations published in the Government Gazette by former Minister of Finance Pravin Gordhan on Friday, 28 March 2014.

The publication of the regulations followed a period of public comment on draft digital tax regulations which originally intended for the VAT on digital goods to kick in on 1 April.

iTunes Connect SA VAT notification (via 9to5Mac)
iTunes Connect SA VAT notification (via 9to5Mac)

App Store prices in South Africa were increased as recently as 1 April 2014 to account for the weak Rand, along with retail price adjustments for Australia, India, Indonesia, Turkey, Israel, and New Zealand.

Pricing tiers for apps sold in Israeli New Shekels and New Zealand Dollar were decreased, while the other 5 currencies (including South Africa Rand) saw increases.

Developers decide on prices for their apps based on certain pre-set tiers, which means that developers whose apps are currently on pricing tier 2 or higher could still select a lower tier to reduce (or eliminate) the effects of the increase.

Queried about the adjustments at the time, a spokesperson for Apple said, “We made some minor pricing adjustments due to changes in foreign exchange rates and local tax laws.”

Pricing in other categories of the South African iTunes store such as music, films, and books did not increase on 1 April, but this time a price hike for the other stores could be on the cards.

According to 9to5Mac, it is likely that the addition of 14% VAT to prices in the South African App Store will spread to to the other web properties.

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New digital tax hits Apple App Store in SA: report