Apple and Google rake in more from ‘app tax’ on Britons than they pay in corporation tax, study finds
Apple and Google are collecting more revenue from a so-called "app tax" charged to Britons than they pay in UK corporation tax, according to new analysis. The study found the tech giants generate roughly £700million annually through commissions of up to 30 per cent on in-app purchases, compared with £322million paid by Apple in corporation tax last year and £146million paid by Google, prompting campaigners and politicians to call for tighter regulation of app store fees.
The research calculated that for every £1 the two firms contribute in corporation tax, they charge Britons around £1.50 through in-app purchase fees, equivalent to about £55 a year for a household with four smartphone users, a figure projected to rise to £91 within five years as the total cost to Britons reaches £4.1billion. Former minister Damian Collins and the Coalition For App Fairness criticised the firms for "overcharging and underpaying", while the Competition and Markets Authority has proposed forcing Apple and Google to let users access cheaper subscription deals, though it has stopped short of capping fees outright despite having the legal power to do so.
- Apple and Google earn more from app fees than UK corporation tax
- App tax could cost Britons £4.1billion over five years
- CMA proposes reforms but hasn't capped fees yet
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Apple and Google run the main shops where people download apps for iPhones and Android phones. App makers can sell digital items and subscriptions through these shops, and the companies take a commission on some purchases, often described as an “app tax”.
The fees are separate from corporation tax, which companies pay on profits made in the UK. App store charges can affect what developers earn and what customers pay, while the tax comparison has prompted debate about whether the fees are fair and how they should be regulated.
The Competition and Markets Authority oversees competition in the UK. Its proposals include requiring Apple and Google to let users find cheaper subscription deals, while questions about whether to limit the commissions remain part of the wider debate.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of tighter regulation argue that Apple and Google control the main routes to smartphone users, giving them substantial power to set commissions that businesses may pass on to consumers. They say limits on fees or rules enabling cheaper subscription options could improve competition and household affordability, especially when the companies’ UK tax payments are lower than the fees they collect.
The case against
Those wary of tighter controls argue that app-store commissions help fund secure payment systems, software distribution, review processes and tools used by developers, while enabling users to buy easily within apps. They contend that imposing fee caps or other restrictions could weaken these services or discourage investment, and that comparing commissions with corporation tax is not by itself proof that the fees are unfair or that the firms’ tax payments are inadequate.