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Taxing Online Gaming: India and China Taking Different Approaches

  • India and China both have laid a heavy hand on the online gaming industry
  • India’s decision to levy a 28% GST on all online gaming transactions
  • China’s restrictions limiting minors to just three hours of gaming per week
  • What this means for Apple and developers located in India

The Indian Goods and Services Tax (GST) Council has decided to levy a hefty 28% GST on all online gaming transactions, which was announced on July 11. This means that total tax collected on some transactions will surpass 50%, including GST, income taxes, and platform commissions. With this new tax in place, it means for every $100 spent by a player, $28 automatically goes to GST. This will have disastrous effects on the booming industry in India, which has seen a growth rate of up to 30%.

Meanwhile, China has been making similar moves over the last few years, enacting restrictions that forced minors to only three hours of gaming per week and stopped issuing new game licenses altogether. It has real-world impacts on Apple, too, as the country has cooled on the App Store, only seeing a small bump in growth in the first part of 2022.

What this means for Apple is that the 30% baseline commission Apple charges could mean developers are left with 20% or less of their income on a given transaction. These tax rates would mean developers would need to increase prices in order to make do, thus potentially driving away customers. Apple isn’t likely to lower its rates even with such lofty taxes in the country, which could further drive developers located in India to other sources of income.

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