Apple Inc. (AAPL) Tweaks App Prices Worldwide Relative to New Tax Rules and Fluctuating Currencies

Apple (AAPL)

Apple Inc. (NASDAQ:AAPL) is implementing price hikes in apps offered in its App Store  for customers in Canada, the European Union, Norway, and Russia, in a move that seeks “adjustments in value-added tax (VAT) rates and foreign exchange rates.”  App store customers from Iceland, however, will benefit from a price decrease.

Apple Inc. (NASDAQ:AAPL) have notified app developers about the upcoming app price changes on Wednesday last week, and the company had started implementing the pricing tweak the following Friday. The changes now indicates a minimum price of an app for Canadian residents at $1.19, while customers from EU now have to pay a minimum of €0.99 for an app. U.K. residents, on the other hand, will be charged a minimum of £0.79. Formerly, Canadian consumers were charged by Apple an entry-level amount of $0.99 for an app, while EU customers where charged €0.89.

Apple (AAPL)

This is not the first time for  Apple Inc. (NASDAQ:AAPL) to roll out pricing changes in its products in reaction to a stronger U.S. dollar. Earlier in December of last year, the Cupertino, California-based company have implemented a 35 percent price hike in its iPhones sold in Russia after  a week of halting online sales in that region. That price increase saw the price of a 16 gigabyte iPhone 6 jumping from the previous 39,900 rubles to its current price of 53,990 rubles, with the company noting that the hike is an effect of the currency’s wild fluctuations. Forrester Research analyst Andrew Bartels states in an interview by Bloomberg that “the strength of the dollar is not just a transitional event.” Regarding the price changes being made by Apple,  Bartels adds that “without making these changes, Apple would be looking at a very significant impact on its revenue.”

The new pricing scheme being implemented by Apple Inc. (NASDAQ:AAPL) for apps from its App Store is also on account of a new EU policy, taking effect on the first day of this year, of charging digital goods with VAT in accordance with the rates of the consumer’s home country or residence.

This article has been written by Nonito Guntan.

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