Taxes on income of large IT companies

Personal income tax for bloggers. Taxes on income of large IT companies. Agreement on the exclusion of double taxation.

According to the Vedomosti newspaper, it became known that the Russian authorities oblige legal entities such as YouTube, Facebook, Instagram, Twitter, TikTok to pay personal income tax for Russian bloggers. Now not only Russia, but also other countries are beginning to impose taxes on the income of large IT companies received within these countries.

The fact is that there are few bloggers in Russia who record YouTube videos in English. Most likely, the tax will be paid by authors whose content is intended for the Russian-speaking diaspora in the United States.

21st century - the age of information technology. The rapid development of the IT industry is causing more and more legislative initiatives regulating this area. First Anti-Piracy Act, Second Anti-Piracy Act, Bloggers Act, Controlled Foreign Companies Act. All these are progressive steps of the state, the purpose of which is to restore order, increase confidence and transparency in the field of information technology.

The initiatives of the Ministry of Digital Development are aimed at finding additional sources of income from the IT industry. They must compensate for the resulting gap in the budget in the amount of more than 40 billion rubles a year. Such a move allows for a reduction in social contributions for the IT industry from 14 to 7.6%, and income tax from 20 to 3%.

As a rule, bloggers commissioned by foreign companies for advertising receive money to their personal account. It can be a dollar card or a ruble bank account. The bank and tax authorities do not qualify such a payment as a commercial one, and if the amount is not under financial control, that is, less than 500 thousand rubles, then in fact no one is interested.

From June 2021, American Google will begin withholding income tax from YouTube bloggers in other countries. This includes revenue from ad impressions. Bloggers must submit a tax return to the AdSense ad sales structure by the end of May.

However, Russia and the United States have an agreement on the exclusion of double taxation.

I would like to recall that the double tax treaty is a bilateral international agreement that regulates the issues of direct taxation of income and property of enterprises and individuals, residents of one state in the territory of another.

Double taxation is a situation in which the tax liability of the same person for comparable taxes arises simultaneously in two countries in relation to the same object of taxation.

The above means that the rate may be minimal. But there are some nuances. For example, if a blogger does not submit a report on time, then all of his income from YouTube is automatically taxed at a rate of up to 24%. In other words, the tax will be withheld from the entire amount, and not just from the income that is generated by the public from the United States.

The tax is quite large. According to experts, the income of bloggers will be subject to double taxation. And this will provoke the transition of users to other sites, as a result of which YouTube will lose part of the audience.

It is necessary to build a system so that the author pays tax to the country in which he earns.

“Video bloggers in Russia earned about $300 million in 2020,” according to the analytical company Blogger Base. And in October last year, there were almost 8 million Russian authors on YouTube.

We recommend that you look at our other materials on the topic of tax structuring and risks:

1. Transfer of LLC employees to individual entrepreneurs

2. Double and black bookkeeping

3. Business fragmentation

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