Ouch, Uncle Vladi goes in for the shakedown.
Legislation informally known as the "Google tax" ordering foreign companies engaged in online sales of electronic content in Russia to pay a value-added tax (VAT) went into effect today.
The law was signed by Russian President Vladimir Putin on July 3, 2016.
The law stipulates the introduction of an 18% VAT for foreign companies providing services to Russians in electronic form. Foreign companies will need to register on the Russian tax service’s special electronic index and pay taxes on equal footing with Russian companies operating in the same market segment. The VAT shall be paid at the latest on 25th of the month "following the expired fiscal period."
The value-added tax will apply to granting a right to use software and databases, including access to online games and loading computer games into electronic devices. The ‘Google Tax’ will cover "granting rights to use electronic books and other electronic materials, graphic images, music and audiovisual products via Internet, including enabling remote access to them for viewing or listening." The VAT will cover provision of services in electronic form, advertising services on the Internet, goods and property rights sale and purchase placement services, providing a trading floor on the Internet, support and website administration.
Russian companies selling applications or games via Apple iTunes, AppStore, Google Play, or Steam marketplaces will also have to pay the ‘Google Tax’.
Google has sent out notices of a potential hike in subscription prices by 18% to its users. "Google complies with fiscal laws in all countries where it operates. We have already notified all users that Russian VAT laws will be amended in 2017. The total price of subscriptions may grow by 18% as a result. The new price will be available after January 1, 2017, when subscriptions will resume," Google’s press service told TASS.