Korean VAT on apps prompts Apple & Google price hikes

Sat 11th Jul 2015

From 1 July 2015, South Korea made foreign providers of apps, software, online games, streaming video or music subject to 10% VAT. This brought these foreign electronic services providers into line with the taxation of similar services by Korean providers.

The outcome has been immediate rises in apps prices on the Google Play platform. Apple iTunes raised its prices on Thursday 8th July.

International VAT on electronic services

Many other countries are introducing similar measures. South Africa introduced VAT on foreign B2C electronic services in 2014. Japan will levy Consumption Tax on e-services from non-resident providers in October 2015. Australia is looking at a 2017 change for foreign providers.

The European Union’s 2015 e-services VAT changes switch the place of supply for EU providers from their home country to that of their customers. This included the introduction of a single VAT reporting portal for all countries, know as the Mini One-Stop-Shop.