Android: In app-billing VAT tax

Question

I have implemented In-app billing in my application, but have limited the in-app purchase function to a few countries/currencies, since I'm note sure what my responsibilites are regarding VAT tax collection and reporting. I find it a bit unclear after reading about it on Google Play Store.

I have read that I have to report VAT to Japan manually, so I have disabled In-app billing for this country.

I can see that Google Play collect tax for many countries.

What countries do I have to make exceptions for?

I would be happy for any feedback :)

Nitrosyl

Answer 1

Google documentation here: VAT Guidelines

For any EU country plus Albania, Morocco, Norway and South Korea you don't have to report or deal with VAT currently but the rest is up to you unfortunately. I'm currently developing a paid app too and looked up on tax issues beforehand.

This is not an exact answer since rules about taxes can change overnight, also there are some controversial debates going on about how Google evades taxes but that is a discussion for another topic.

To give an example, for my country (Turkey) you have to prepare a report about your annual income amount if you are located here but even then some financial reporters claim that selling software is actually "renting" it so it cannot be taxed. My suggestion for you would be to update your billing strategy according to the link above and if any unwanted situation occurs oppose it with the given legal information.

Offbeat

Thanks for the feedback, really appreciate it! I'm wondering if I have to manually report and pay VAT tax income to US, or google handles it for me. And what about other large countries, like Russia, Brazil, Mexico? – Nitrosyl

For US region, Google explicitly states that they report the VAT on their own. Not sure about the other ones but in the given link, Russia seems a little bit problematic about the VAT issue. – Gift

Thanks for reply. Where did Google state that they report VAT in US? Its strange as they do not include VAT when setting up a price, like they do with EU countries. – Nitrosyl

Tax for Google Play Here it says "VAT is applicable to countries outside of the U.S." so for sales from US to US no VAT is applicable as to my understanding. For the other regions, the rules are same with the original link that I gave. Google handles its own tax reportings, that's what I've meant. (I'm not an expert on the US tax laws but that is what I got from their documentation.) – Gift

Answer 2

In case of Japan and GooglePlay, you have to do the whole VAT procedure on your own if your income reaches a threshold of 10 million Yen (about 95 kUSD) per year, otherwise no action from your side required. If you make that much money you could probably pay a tax professional to deal with this.

Source: National Tax Agency JAPAN

No.6　Taxable Person Business which falls under either of the following categories is a “Taxable Person” who is required to file the final return.

(1) Businesses which had a taxable sales amounting to more than 10million yen during the Base Period (See following Figure A), ...

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