Japan will require companies like Apple to pay taxes instead of developers

App Store

Small developers operating outside Japan may be difficult to prosecute for owing consumption taxes, so the Ministry of Finance placing the burden on Apple and other app market operators.

Mobile app markets such as the Apple App Store continue to grow in Japan, meaning the amount of income subject to tax is constantly increasing. However, the country has difficulty collecting taxes on every sale that requires it.

Japan's Ministry of Finance is making app store operators such as Apple and Google responsible for paying consumption taxes owed to foreign developers, according to a Nikkei Asia report. These changes will not take effect until 2025 to give companies time to adapt.

The idea is that Apple and Google know how much money their app stores make in Japan. This way, companies will know how much consumption tax is owed to Japan and pay it in full.

The current consumption tax is 10%, which Apple will pass on to its developers. So, for example, to Apple's 15% to 30% share of revenue from sales and subscriptions in the App Store, Apple would add another 10% to pay Japanese consumption tax.

Developers will then have to adjust prices to account for this price increase. Some developers have already paid the tax properly, so this should not affect their annual income.

Apple has previously been fined for improperly paying consumption taxes. The company owes $98 million in 2022 for improperly exempting tourists and resellers from consumption taxes.

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