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Government IOS Software The Almighty Buck Apple Technology

Russia May Force Apple To Reduce Its App Store Tax To 20% (pcmag.com) 87

Posted by BeauHD from the mounting-pressure dept.
A new bill submitted as draft legislation to Russia's lower house of parliament wants to see the commission taken by app store owners limited to just 20 percent. The change would impact both Apple and Google's app stores, but any other that operate within Russia. PCMag reports: It sounds like a great move for app developers, but the bill goes further and stipulates that developers would be required to pay 30 percent of their app income to a special IT training fund. So rather than losing 30 percent to Apple, developers would be losing 50 percent in total -- 20 percent to Apple and 30 percent to this new training fund. If the bill passes, it would surely see a large influx of cash into the training fund, but could also result in developers opting not to offer their apps to the Russian market in future. There's little incentive to if 50 percent of your app charge goes to other people. Alternatively, it could see app prices increase in Russia to compensate for the change. Apple also wouldn't be very happy, but there's little it could do if the bill passes into law.
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Russia May Force Apple To Reduce Its App Store Tax To 20% More

Russia May Force Apple To Reduce Its App Store Tax To 20%

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  • Not a tax (Score:5, Insightful)

    by DogDude ( 805747 ) on Wednesday September 02, 2020 @05:54PM (#60467414)
    A tax is imposed by a government. This is a fee. Big difference.

    • Re:Not a tax (Score:4, Interesting)

      by rsilvergun ( 571051 ) on Wednesday September 02, 2020 @05:58PM (#60467426)
      Apple is bigger than most governments. Has more power too.

      • Apple is bigger than most governments. Has more power too.

        Something entirely irrelevant to the discussion since the definition of "tax" has zero to do with size.

    • I will do you one further. A TAX is something levied by the House of Representatives or State Government. Those charges on your phone bill levied by the FCC are FEES. As they lack the authority to levy a tax.

      • RTFA... they're trying to get the fee cut from 30% to 20%... but also instating a new 30% tax for training, meaning app store participants would only get 50%.

        • Re: (Score:2)

          by ddtmm ( 549094 )
          Exactly!

        • Re: (Score:2)

          by rtb61 ( 674572 )

          Just a gambit claim to scare the crap out of businesses so the final claim wont seem so bad and likely if they pay for training directly, they wont have to pay that charge. The Russian government leveraging developers and tech corporations to spend more money on training.

          Kind of smart, either spend a percentage of income on training, or spend that on a government charge, so government can spend it on training. Also put some protections in for developers, so they do not feel so bad about paying for training

      • So they lack the authority to levy a tax, but have the authority to levy a tax by re-labeling it a fee? So basically they only lack the authority to call their required payments a tax.

    • Of course it's a fee. That's not the point. People call it a "tax" as a form of satire, comparing Apple to a tax-heavy government.

    • People call it a tax because, like taxes, it's certain. In principle, a fee is something that you pay in exchange for an optional service. "I would like to hire you to do something, and will pay your fee." you might say. Taxes pay for services as well, and the Apple tax does likewise pay for... something... but there's nothing optional about it, and you have more control over what regular taxes pay for than what the Apple tax is going to. Might as well just be dropping that money down a hole.

      • Re: (Score:2)

        by jythie ( 914043 )
        I guess it depends on how entitled your idea of 'optional' is. Apple charges for access to their network and their app store. If you view such access as an entitlement, then it is a non-optional 'tax'. If you view such access as something that can be sought after or not, then it is just an optional 'fee' that you take on if you want the service they are offering.
        • By maintaining control over the their customers' phones, Apple can offer a demand a large fee in exchange for a trivial service. In economics, this is known as rent-seeking. It's frowned on, because the rent seeker (Apple) contributes nothing further to the economy. A rent-seeker did something to get into this position, and that something may have been constructive (literally constructive, in the case of literal rent), but they are now just a drain on resources.

          This has nothing to do with "their app stor

  • Russia is useless (Score:4, Interesting)

    by backslashdot ( 95548 ) on Wednesday September 02, 2020 @05:54PM (#60467418)

    Doubt Apple cares about losing sales to Russia. They'll just pull out of Russia. Now if China were to pull out, they'd be in shit. But that's unlikely to happen as long as their politicians are happy .. unless they start getting greedy en masse.

  • WTF? (Score:4, Interesting)

    by nospam007 ( 722110 ) * on Wednesday September 02, 2020 @06:00PM (#60467432)

    "The change would impact both Apple and Google's app stores, but * any other that operate within Russia."

    After the BUT there's a word missing, either NOT or ALSO.

    • Or possibly "The change would impact NOT ONLY Apple and Google's app stores but any other(S) that operate within Russia"

      • FYI: Your title makes it sound like you're contradicting the OP (and being a dick about it), which is probably why you got modded troll. I had to do a double take of your post to realize you were agreeing with him. I thought it was rather ironic since the point of both posts was to highlight how a reckless use of language can cause misinterpretations.

  • LIKE HELL there's little they could do (Score:1)

    by Anonymous Coward

    Apple also wouldn't be very happy, but there's little it could do if the bill passes into law.

    They could liberate the hardware so that people could use their own computers, however they want, without having to go through anyone's store. 50% of 0 rubles is 0. (How much does Russia charge Ubuntu or Debian for allowing users to use the repo?)

  • no, you take the small cut and kick the big cut up to me.

  • What is going to happen if 100,000 Russian app developers are given an incentive to side load apps?

  • in Soviet Russia... (Score:4, Funny)

    by Anonymouse Cowtard ( 6211666 ) on Wednesday September 02, 2020 @06:28PM (#60467530) Homepage
    ... Apple eats you!

  • The fund can be set up such that any company who pay this 30% fee on hiring a summer intern can bill the entire salary of the intern to this fund. Also 50% of salary of anyone with less than 2 yrs experience for the first 2 years at the company. This will lead companies to do more of their development in Russia. Use the market power of the Russian customer to move production to Russia. Capitalism rocks.

    • Re: (Score:2)

      by ghoul ( 157158 )

      The first 2 years out of college you are basically paid to learn which is why companies dont like hiring freshers. They would rather hire folks who have already learnt at someone else's expense. Which in the US means H1Bs who have learnt their trade in India on low salaries. Reduce the cost of hiring freshers by 50% while keeping the market value of the position constant and you get more freshers hired. After 2 years there will be a 200% jump in their cost but in most cases programmer productivity grows mor

  • will apple let people price higher there / change more on apple store vs they non apple sales

    • will apple let people price higher there / change more on apple store vs they non apple sales

      Apple has developers charge tiers for their apps. Those tiers then equate roughly so tier N is N USD, but the translations to local conditions (things are cheaper in developing countries, etc.). So Apple could just raise rates in Russia to accommodate this law and all apps would get more expensive with no action from developers.

      • RTFA, seriously.
      • If Apple did this (hypothetically): I have a $9.99 app in the store, so Apple gets $3 and I get $7. In order to get $3 from 20%, Apple would raise the app price to $15, so Apple gets $3 and I get $12. Sounds good to me, since I don't live in Russia.

        I wonder how anyone in Russia thinks they could have any influence on a contract between me (UK) and Apple (USA).
    • These Apple (and Google) fees are doomed to decrease a lot. This is just a start, but I doubt the Europe community will let Apple and Google milk them for long.
  • 30% tax on an effective 80% income is not 50% of the retail price. That would result in 56% of the retail price as net for the developer. The summary sounds like the tax will be collected from the app developers, which would create an enormous overhead to enforce. Logic suggests this 30% tax should be collected from the retail channel (i.e. app store operator), which would make more sense an introduce another calculation for taxation which would not equal 50% payout to the developer either! Is this really

  • There's little incentive to if 50 percent of your app charge goes to other people.

    Or you raise your prices to cover it.

    I remember back in the olden days of disks/CDs in boxes that the "wholesale" price of software was about half the "retail" price. So if you went and bought a box with "Marathon: Infinity" for $49.95, the store probably paid Bungie about $25 for it.

  • Russian shakedown (Score:3)

    by hdyoung ( 5182939 ) on Wednesday September 02, 2020 @08:30PM (#60467812)
    That "IT training fund" will fund exactly zero IT training. Shaking down and liquidating the remaining productive industry is how Putin has survived since he took office. Just about any profitable industry in Russia has to skim profits to him and his buddies.... or give up their companies altogether. I'm actually surprised that Apple managed to avoid this for so long. That apple might simply be too big for Russia to bite off.

    Pretty standard dictator behavior - a small burst of energy followed by a long diet of eating your country's seed corn because you don't really care what happens when you're gone. What's going on in Russia is textbook decline. So boring. The really interesting thing will be to see if China follows the same path or if they do something different. It should be obvious sometime around 2030. Xi's not long in the tooth..... yet. One can always hope they take the smart road.

    Apple should simply call their bluff. All Apple really has to do is pull out entirely and make sure that even the elites can't use their iDevices within Russia. The pushback will be hard and fast. Putin has to keep the upper crust happy or he'll wind up drinking his own little dose of Novichok or polonium. It's Russia, after all.

    • Yeah, someone in office for over 20 years, with decades more in other government positions, definitely doesn't care what happens when they are gone. Especially if they are as welcome as Putin in every other country in the world for their retirement... right on....

      Also most seem to survive and lead productive lives afterward this Novichok super poison, you'd think it does nothing but give mild diarrhea. Obviously Putin must have pretty low IQ to keep using poison that quite literally never worked before....

  • Japanese tax (Score:4, Interesting)

    by seoras ( 147590 ) on Wednesday September 02, 2020 @09:22PM (#60467936)

    I've been publishing apps for several years now.
    There was a tax form that you could optionally complete and submit to Apple to request non-resident/non-tax exemption from Japan for all app sales in Japan.
    It was something like 20% that Apple had to automatically deduct and hand over to Japan each month on all your sales within that country.
    The tax form was only available in Japanese and could only be submitted once. (from googling researching it generally wasn't successful for those who submitted it)
    After trying to have a go at it I gave up. I didn't get that much revenue from Japan and 20% of what I did get wasn't worth my time and effort.
    Just looking now on App Store Connect I see no sign of Japanese tax options in my account. Things may have changed.

    I can't see Russia being able to enforce a 20% max commission on anyones behalf other than their own home based app publishers.
    Which may see Apple saying dasvidaniya to Russian based app developers.
    "IT Training Fund". Yeah, right...
    30%? I'll be un-checking the RU country availability box and saying dasvidaniya myself if I'm going to be paying for Tumusov's dacha re-modelling.

  • Tax? (Score:1)

    by bn-7bc ( 909819 )
    Ok this might be slightly ot, but is it really a tax, and if we call it that. Is the markup done in any other store ( be it brick an mortar or digital) also a tax? Is in fact any mrkup for what ever reason, on anything now called a tax. I donâ(TM)t object if that is the case as long as we all ( or most of us agree) and use the term consistently and not cherry pick.
  • Here's what the bill actually states (per Cnews): 1. Consumer should be able to install third-party market place apps. 2. OS Vendor cannot restrict installation of third-party apps. 3. Maximum cut a vendor can take from the sale of the app or in-app purchases is 20%, from which a third will go to a dedicated government foundation for the development of ICT human resources each quarter. Yep - it's the marketplace owner who pays, not the developer. 4. Vendor has to publicly disclose sales figures each qu

  • This is going to kill a lot of distribution models.

    When its split 70/30 there are distribution costs of airtime which can be upwards of 15%. Then there is VAT, lets say 15%, then there are your operating costs and then the appstore operating costs. Lets assume you set the operating costs at 5%. Before you've even started you are on 40% from the headline cost of the service deducted. If you can agree that the revshare is after VAT you are now on 25%. At 30% split you are squabbling over 5% profit betw

    • Re: (Score:2)

      by Tim12s ( 209786 )

      To clarify, when a mobile service is subsided and the customer pays from their airtime, the above applies.
      When paying from credit card the distribution cost would be only the credit card costs if using a credit card.

    • Re: (Score:1)

      by Sin2x ( 1189089 )
      You have it wrong, VAT is not included in this ratio at all - it's paid by the consumer. And then you have Epic Store which happily operates at 12% cut of revenue as opposed to 30% at Apple and Google, while having a lot less resources at their disposal. That's rather telling.
  • They are a smaller economy than Brazil, I'm not sure they have much leverage.
  • Allpe will not lose 10%. They will just add a monthly maintenance fee for offering the apps in Russia.

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