The government is preparing a new tax for foreign IT companies. It will amount to 3% of the income they receive from Russian users. The new law will also affect app stores.
This was reported by Forbes with reference to an official in the Ministry of Digital Development, Communications and Mass Media. For example, if the law is adopted, Facebook will have to give 3% of all revenue it received from payments from Russians or on monetization of their data.
It’s just unclear whether there will be double taxation in the situation with app stores. Will those developers who work with Russian users through the App Store, Google Play or Steam have to pay the tax separately?
The official noted that the new tax will be introduced by analogy with the existing one in the UK, where from April 1, 2021, IT corporations pay to the treasury 2% of, an important nuance, profits from British users, not income.
The preparation of the bill was confirmed to Forbes by the representative of the deputy chairman of the government Dmitry Chernyshenko. However, he clarified that it has not yet been finally decided whether the law will be introduced unilaterally (as in the same UK) or whether Russia will join the global digital taxation system, which is being worked out by the International Organization for Economic Cooperation and Development (OECD).
Apparently, we are talking about a law that was first discussed in March of this year. Then he received the code name “Digital Tax“. Initially, it was formulated that the state wants to charge an additional fee from those foreign companies that use the data of Russians and advertise their products here.
After its discussion, Vedomosti immediately called the initiative a “New tax on Google.” As for the original “Google Tax”, we recall that since 2017, all foreign companies engaged in the sale of digital services and content must deduct VAT in the amount of 18% from services sold in Russia. Since 2019, the tax has increased to 20%.
The “digital tax” is far from the only initiative being discussed today in the Russian government and concerning foreign companies. For example, in April, the State Duma introduced a bill on the mandatory opening of branches of large IT companies in Russia, and in May Roskomnadzor proposed to oblige gaming companies to store data about gamers and their correspondence.