This is Garrett Murray's Maniacal Rage

Lots of Twitter responses to my post about Apple’s tier pricing not paying 70% profit, and it’s possible we’ve figured out what’s going on, although, as usual, Apple is opaque as shit so who really knows.

There were a lot of suggestions that the difference was caused by VAT and other kinds of taxes being charged in certain countries but VAT, while included in the cost of the product, isn’t something that would be held from me. VAT is charged to the consumer and normally the seller collects it. However, in this case, Apple is collecting the fee and passing only the profit on to me. Since VAT is added to the cost of the app, they just simply don’t pass it onto me at all. I.e., if VAT were the culprit for this issue, the problem would be the exact opposite—I would be making 15% more in these countries. But I’m not.

It would seem, then, that Apple is holding income taxes on the behalf of developers. The only issue I have with this is that I might not end up needing to pay the amount Apple things I do, depending on many tax factors such as write offs, total income, et cetera. And that I would prefer Apple be very clear what they’re doing with my money. After all, it is my money.

But if this is indeed VAT or GST being taken out, why don’t the percentages add up? 15% is the VAT amount in the UK, yet I get 60% (10% less) profit there. And if Apple is indeed holding income tax for me, why does the contract keep alluding to me being completely responsible for income tax in every country?

Even more update: Okay, so as Twitter user Alan C Francis pointed out, it looks like Apple’s holding the VAT or GST. In the case of the UK, Apple’s holding 17.5% VAT, which, after removed from the total cost, the profit amount Apple’s paying out is 70% of the remainder.

It’s unfortunate, then, that Apple is using outdated conversion rates on currency, since the US Dollar was so ridiculous weak when they set the tiers up. Right now the 70% profit made from UK sales is 23% lower than it should be. At least now I know why.