Hi Guys,
This is not a Corona related topic but since I can’t find help on Apple site I hope those who have experience here can help.
I’m living outside US and my country doesn’t have Income Tax Treaty with the US, which tax form is required? do I have to pay 30% tax on my app sold?
Thank in advance.
Steve [import]uid: 84159 topic_id: 17508 reply_id: 317508[/import]
Steve where are you from?
Apple will pay you the monies it owes you and then you put that as your income and have to pay accordingly. If you are NOT in the US, you do not have to pay any taxes, you will pay taxes in your country only.
Cheers,
?
[import]uid: 3826 topic_id: 17508 reply_id: 66494[/import]
Steve,
Are you referring to the 30% Apple takes off the top for all apps? It’s not for taxes as Jayant stated, but for apple’s cost and profit to support the the whole AppStore and ecosystem. 30% percent is a fair price considering how much data center support and staff it takes to process orders and keep everything running and upgraded.
On my day job, our company is a major supplier to Apple to support this, and the resources are staggering Apple has put into this effort. I like how the hosting and purchasing process is consistent for all iOS customers, unlike the Android marketplaces.
-David
[import]uid: 96411 topic_id: 17508 reply_id: 66499[/import]
Thanks, JayantV and David.
David, I’m not referring to 30% share for Apple. I’m curious if there is any tax withheld by Apple for US gov to sell the app on US app store. Its not clear from the iTune Connect and many people are asking the same question.
Steve [import]uid: 84159 topic_id: 17508 reply_id: 66502[/import]
It all varies country-to-country, but in a nutshell, it works like this:
Your app makes a sale.
You make 70% of that sale (income).
Apple makes 30% of the sale (income).
You pay taxes on your income.
Apple pays taxes on their income.
The cut that Apple takes isn’t a tax, it’s just the price it costs per-sale for your app to be hosted/distributed in their App Store. [import]uid: 52430 topic_id: 17508 reply_id: 66584[/import]
Hi Jonh,
Of course I pay tax on my income to my Gov, but I’m not sure if I also have to pay to the US Gov for app sold on US app store. Thanks.
Steve [import]uid: 84159 topic_id: 17508 reply_id: 66613[/import]
You do not have to pay tax to the US government for selling an app in the US store, no. (Because you live outside the US.)
Of course if you have a registered company in the US then you must pay tax in US, however I’m guessing this isn’t the case.
Peach [import]uid: 52491 topic_id: 17508 reply_id: 66625[/import]
Like the previous posters have said, you only have to pay tax in the country you live in for the income you receive in your bank account.
I’d recommend that you fill in the Japanese Tax forms though. It’s a simple process and Apple takes care of the translation for you. You just need to download the forms from iTunes Connect (Contracts, Tax, Banking section), follow the instructions and send the paperwork to Apple.
If you make a sale in Japan, Apple will automatically withhold 20% tax from your earnings according to Japanese tax law. Depending on which country you live in this tax could be completely eliminated or greatly reduced. In my case the tax was cut in half to 10%.
Even if you don’t think Japan will be a big market, it’s unnecessary to pay more tax than you need to when you get a sale from Japan. For me it has turned out to be a good decision since around 20% of my sales are in Japan.
[import]uid: 70847 topic_id: 17508 reply_id: 66641[/import]
ingemar, how about Canada and Australia? Thanks.
Steve [import]uid: 84159 topic_id: 17508 reply_id: 66680[/import]
…those are only needed if you live in Canada or Australia.
There’s no withholding tax taken from your earnings there. [import]uid: 70847 topic_id: 17508 reply_id: 66686[/import]
Steve, as Ingemar said those only apply if you live in the AU or CA. (If you live in Australia you actually have to apply for an ABN and register for the GST - not sure about Canada but imagine it is similar.)
David, very informative post and interesting to read.
Peach [import]uid: 52491 topic_id: 17508 reply_id: 66864[/import]
ingemar
Would you please point me to more informations about the japanese tax law that you are referring to?
i am not sure that I understood well what you wrote.
If you make a sale in Japan, Apple will automatically withhold 20% tax from your earnings according to Japanese tax law. Depending on which country you live in this tax could be completely eliminated or greatly reduced. In my case the tax was cut in half to 10%.
This is the part that I didn’t get.
Apple keeps 30% of income. Then…? If you could please explain with a basic example? [import]uid: 95346 topic_id: 17508 reply_id: 66926[/import]
I have just got more info from Apple.
Thanks, David and everyone for sharing.
Steve
[import]uid: 84159 topic_id: 17508 reply_id: 66934[/import]
@MrMells
Well… Apple takes their 30% cut and if a sale is in Japan, another 20% will be taken from what’s left. This might sound like everything is being eaten up by taxes, but one thing to keep in mind is that the price in Japan is around 10% higher anyway. An app that sells for $1.99 in the US sells for the equivalent of $2.20 in Japan.
I live in Korea where they have a tax-treaty with Japan, so my tax was reduced to 10% for Japanese sales. Since the tax was reduced, I’m basically earning as much from Japanese sales as I do from US sales.
[import]uid: 70847 topic_id: 17508 reply_id: 66938[/import]
Thank you for the explanation, it’s clear now.
It was a bit hard for me to understand because I’m living in Japan but I’ll move to another country (maybe Korea) in a few months. This makes the calculation a bit complex (indie) [import]uid: 95346 topic_id: 17508 reply_id: 66939[/import]
It’s always good to talk with a tax accountant or enrolled agent in the US.
We have several types of taxes in the US: Sales tax by state, income tax on company profits, duties & tariffs, and excise tax. For our purposes here we are only concerned with Sales tax and income tax. the other don’t apply.
First the US does not have a national sales tax or VAT and no states have a VAT tax. God bless America for that!
In general, the States do not have any sales tax on services, or VAT of any kind. Software purchased and electronically delivered is considered a service. Software purchased and delivered on media or in a box is considered a product and not a service, and subject to local & state sales tax. In fact ANY physical delivery related to a software purchase changes the category from a sales tax free service to a product requiring collection of sales tax.
In my day job, I bought a $1M USD software license via purchase order and received the software by download. Someone else on my team requested printed copies of the documentation be included and physically shipped. This resulted in our having to pay 9% on $1M dollar purchase. I had the order cancelled before it was shipped, and restated the order as Electronic download only for both software and docs.
One more thing about US tax, You (the company/provider) are responsible for paying income tax profits (income - expenses = taxable amount) if you live in the US as a sole proprietor or your company is located here (either in whole or in part) you are responsible for the US generated profits and overseas profits that are repatriated back to the US. The company selling goods is responsible to collect sales taxes, and the tradition or custom here in the US is to “uplift” the purchase price by the correct sales tax amount. The company must then give those sales tax proceeds to the tax entity in the state where you have operations and also ship to same. States cannot force collection of Sales taxes for products shipped in from another state. States like California have tried hard, but the Supreme Court has stated this is a violation of the US constitution.
Remember, to just have electronic delivery for any and all software & documentation, and you don’t have to worry about US sales taxes.
-David
[import]uid: 96411 topic_id: 17508 reply_id: 66701[/import]