Hopefully I can clarify the intent of the contract.
I believe there are two different taxes referred to in your question. There is VAT on the sale to the consumer; and income tax on the payment made to the developer. I'll cover them separately below:
Canoncial will collect UK VAT (currently 20%) from each sale and pay this to HMRC (the UK's tax authority). The sale price that the developer sets should be inclusive of this tax. VAT is not applicable on sales outside of the EU, but to keep the pricing simple and straightforward for the consumer, the one price has been set for both EU and non-EU customers. This means that the developer's margin will be larger for non-EU customers. The royalty statement sent to each developer will outline the EU versus Non-EU sales and detail any VAT deductions. This is covered in clause 4.2 of the developer agreement.
Clause 3.3, which says
"You are responsible for determining applicable taxes in connection with distributing your App, and you shall pay applicable taxes to the applicable tax authorities"
refers to the income tax that is payable by the developer to the tax authorities where they are a tax resident. This means that the developer needs to declare their income (the net payment made by Canonical to the developer) and pay the applicable income tax in their own country.
I hope this provides some further clarity, but if there's any other questions please let me know.