The UK government is reducing the VAT rate from 17.5% to 15% on the 1st of December. As you know, content and services sold on mobile in the European Union are liable to tax at the UK VAT rate, which the Bango Payment system automatically takes care of for you. If we consider a typical transaction of £3.00, this currently equates to revenue of £2.55 plus 45p VAT calculated at 17.5% (before billing costs).
Assuming you maintain your current pricing, the reduction in VAT starting on 1st December gives you an approximate 2.4% increase in your revenues immediately, meaning the typical £3.00 transaction now pays you £2.61 (before billing costs) instead of £2.55. Bango will automatically calculate this into your revenue share payouts as soon as the VAT change takes effect.
The reduction in UK VAT to 15% means that you could, if you wished, pass that sales tax saving through to your customers, theoretically reducing the price of your £3.00 content to £2.94. With the new 15% VAT rate this will give you the same £2.55 revenue share (excluding billing costs). However, since many operators only support fixed price points, reducing your price in this way may no longer meet price points supported by some operators.
Keeping your price points the same and enjoying the additional margin is therefore the simplest response to this change!
You do not need to take any action to keep your existing price point – the Bango Payment system will automatically deduct VAT at the new rate from the start of December 1st.