Apple has announced that it will update its pricing for apps and in-app purchases from July 25th, 2023 in three African countries i.e. Egypt, Tanzania, and Nigeria. The price changes are set to impact both app developers and consumers in these markets.
According to Apple, this is due to tax regulations, foreign exchange rate adjustments, and the implementation of Value Added Tax (VAT). With this, it may mean that prices will increase even though the company did not specify whether this adjustment would be upward or downward.
Apple claims that it is revising pricing in the affected countries to reflect recent changes in tax laws and foreign exchange rates. Tanzania had implemented an 18% VAT plus a 2% digital tax, while Egypt had instituted a 14% VAT.
When tax regulations or foreign exchange rates change, we sometimes need to update prices on the App Store in certain regions and/or adjust your proceeds. These updates are done using publicly available exchange rate information from financial data providers to help ensure prices for apps and in‑app purchases stay equalized across all storefronts.
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Nigeria’s 2021 Finance Act played a major role
However, in Nigeria, although Apple did not highlight its tax change, we can recall that in January 2022, Mrs. Zainab Ahmed, the then Minister of Finance, Budget and National Planning, disclosed that the federal government of Nigeria would impose a six percent tax on turnover for offshore companies providing digital services to local customers in Nigeria, as provided in the 2021 Finance Act.
She explained that the tax on digital services encompasses apps, high-frequency trading, electronic data storage, and online advertising. Additionally, she stated, “This introduces turnover tax on a fair and reasonable basis.” The new policy is found in Section 30 of the Finance Act, which amends the provisions of Sections 10, 31, and 14 regarding VAT obligations for non-resident digital companies.
Mrs. Zainab Ahmed further clarified that Section 30 of the Finance Act is designed to amend sections 10, 31, and 14 of VAT in relation to VAT obligations for non-resident digital companies, and the mechanism to be used will be to primarily restrict VAT obligations to digital non-resident companies that supply individuals in Nigeria who are unable to self-account for VAT.
How will this affect Apple developers and customers in Nigeria?
The Apple statement further said:
If you’ve selected Egypt, Nigeria, Tanzania, or Türkiye as the base storefront for your app or in‑app purchase (excluding auto‑renewable subscriptions), the price won’t change on that storefront. Prices on other storefronts will be updated to maintain equalization with your chosen base price. If the base storefront for your app or in‑app purchase (excluding auto‑renewable subscriptions) isn’t Egypt, Nigeria, or Tanzania, prices will increase on Egypt, Nigeria, and Tanzania storefronts.
The pricing and taxation update announced by Apple will have an impact on both Apple developers and customers in Nigeria. Developers may need to adjust their prices accordingly, which could potentially result in price increases for apps and in-app purchases in the region.
However, if developers have auto-renewable subscriptions as in-app purchases or if they manually manage prices on storefronts instead of using automated equalized prices, their prices will not change.
The price changes might also affect the proceeds and tax administration for developers in Nigeria. This means that the earnings from sales of apps and in-app purchases, including auto-renewable subscriptions, will be adjusted to reflect the new tax rates and updated prices.
Although, the statement only mentioned Egypt and Tanzania as the markets where Apple will collect and remit the applicable taxes directly, it is unclear whether Apple will directly collect and remit taxes in Nigeria.
Regardless, developers in Nigeria will still have the ability to manage the prices of their apps, in-app purchases, and auto-renewable subscriptions at any time through the Pricing and Availability section of App Store Connect.
For customers in Nigeria, they will likely experience these price changes when purchasing apps and making in-app purchases on the App Store. Although, auto‑renewable subscriptions carried out on the App Store by app developers and users are excluded from these changes.
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