Google tax: myth or reality
21st century - the century of information technology. The rapid development and growing demand for IT products are generating more and more legislative initiatives to regulate the IT sphere. The first anti-piracy law, the second anti-piracy law, the law on bloggers, the law on controlled foreign companies, the law on oblivion ... All these are progressive steps of the state, the purpose of which is to restore order, strengthen certainty and transparency in the field of information technology.
How justified and effective the measures taken is a controversial issue. The rapid growth of IT, the versatility of relations in the IT sphere force the state to be in the role of catching up.
Nevertheless, as practice shows, the role of a catch-up only stimulates the state to search for and legislatively consolidate new mechanisms that can increase the capitalization of information technologies.
So, on January 29, 2016, on the Kremlin website (http://www.kremlin.ru/acts/assignments/orders/51235), information appeared on instructions signed by Putin V.V. according to the results of the first Russian forum "Internet Economics". A total of 16 instructions were formulated.
The President’s order was most resonant, addressed to the Federal Antimonopoly Service of Russia, the Ministry of Economic Development of Russia, the Ministry of Finance of Russia, the Federal Tax Service of Russia, the Ministry of Industry and Trade of Russia, and the Ministry of Communications of Russia, and related to the submission of proposals to amend legislation to ensure equal conditions for companies to operate in the Russian Federation using the Internet.
The truth has not yet been officially disclosed what is meant by “equal conditions for the conduct of business by companies in the Russian Federation using the Internet.”
There is an assumption that equal conditions apply to taxation of Russian and foreign IT companies that sell software to Russian consumers. It is planned to consolidate the obligation of foreign IT companies to pay VAT on the sale of IT products, the provision of IT services to Russian consumers (“Google tax (Google)”).
This assumption was put forward by the newspaper Vedomosti. It seems to us extremely logical and that’s why.
Firstly, on December 24, 2015, a bill was submitted to the State Duma of the Russian Federation, sponsored by Andrei Lugovoi and Vladimir Parakhin. The bill proposes to equalize Russian and foreign IT companies in terms of paying VAT on operations to sell applications, music, books and other content.
Secondly, German Klimenko, the chairman of the Iranian Council and assistant to the president on Internet issues, in his statements repeatedly noted that this bill will equalize market conditions for domestic and foreign representatives of the Russian IT sector.
It is not surprising that after the bill was introduced with such a content and the official position of the presidential adviser on the Internet was covered, the president was instructed to submit proposals to amend the law.
All the above events only confirm that the state policy in the field of IT has changed. If before the IT market participants were granted preferences in terms of paying reduced insurance premiums and non-payment of VAT on the issuance of licenses for programs and databases, now some of them will be canceled.
For example, the bill, which was discussed above, provides for VAT on a number of IT services: selling digital content, digital software, hosting, domain registration, voice services over the Internet, storage, etc.
The list of services is impressive, isn't it? If now tax legislation exempts the issuance of licenses for programs and databases from VAT, then the bill cancels this “preference”.
If the introduced bill nevertheless becomes law, then not only foreign IT companies that will be forced to pay Google’s tax in Russia, but also domestic soft companies will experience material inconvenience.
Given the current policy of the state, who wants to replenish the budget at any cost, as well as global trends in the IT industry, it is highly likely that the "Google tax" will come true. According to estimates, the introduction of the tax will provide replenishment of the treasury by 52.6 billion rubles.
But this is not all that awaits the IT company. Recall that at the end of 2017, the period of validity of preferential insurance premiums for IT companies expires (14% instead of the standard 30%). True, not everything is so sad here. The President instructed to prepare proposals for the extension of reduced insurance premiums for IT companies.
The introduction of the “Google tax”, VAT on IT services - all this will inevitably lead to higher prices for electronic services, IT products.
As usual, the ordinary consumer will have to puff.
It is highly likely that as a result of all measures taken, the Russian IT market will become less attractive not only for foreign IT companies, but also for domestic ones.
Then each of them will be forced to decide for themselves. Pay, or find ways to circumvent the law. Which option would you choose yourself?
02.02.2016
Elizabeth Razin
Our law firm provides various legal services in various cities of Russia (including Novosibirsk, Tomsk, Omsk, Barnaul, Krasnoyarsk, Kemerovo, Novokuznetsk, Irkutsk, Chita, Vladivostok, Moscow, St. Petersburg, Yekaterinburg, Nizhny Novgorod, Kazan, Samara, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm, Voronezh, Saratov, Krasnodar, Tolyatti, Sochi).
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