Google, Tech Giants Will Pass New Tax Costs Onto Customers

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Google, Apple, Amazon, Facebook, and other tech giants will reportedly pass new tax costs in Europe onto customers. That includes new taxes in the UK as well as in other countries on the continent. But the companies won't necessarily be passing the tax onto everyday users of their products. At least not directly. Instead, the cost could potentially be pushed that direction by advertisers and developers.

How are Google and others passing the tax costs on?

The taxes in question are split across the UK and other European countries. The decision to implement an individual tax rate for the countries follows talks to create a globally-utilized tax on digital services which ultimately fell apart.

So the costs being passed onto customers for tech giants aren't going to be evenly distributed. In the UK, for instance, Google and YouTube will be passing on around 2-percent in costs to advertisers. That will be 5-percent in Austria and Turkey. And, in the UK, that's going to equate to around £120m added to marketers' costs.

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Facebook is another company that's expected to follow that same path forward.

Other tech giants, including Amazon and Apple, appear much more likely to pass costs onto end-users though. And that's because both will be increasing costs for sellers on their platforms. For instance, Amazon has said that the 2-percent increase in the UK from digital services taxes, will be pushed over to sellers in its online marketplace.

Apple, conversely, will be changing how it pays developer fees. Typically, it pays a 20-percent VATfor each purchase. But it's tacking on the extra 2-percent in the UK as a split cost between itself and developers. So developers will effectively eat an additional one percent cost. And so will Apple. That will have an impact on developers' bottom lines, potentially disrupting the app market on pricing.

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In Turkey, Apple is raising App Store prices for consumers more directly. That's at a rate of 7.5-percent. That follows an earlier increase for UK customers by 25-percent, resulting from Brexit dropping the value of the pound.

How will this end up on end-users?

Tax increases aren't necessarily unsurprising here but neither is the decision to pass that cost onto customers. And this will undoubtedly impact costs for customers across each service. While the majority of costs are being put on developers and advertisers, advertisers may end up charging more themselves. Developers could too.