The Federation Council approved the law on introduction of a tax on the downloading of apps

The Federation Council approved a law to levy VAT (18%), with Internet transactions for the sale of foreign companies Russians of electronic services. In particular, we are talking about the tax payment when buying a mobile apps in the App Store and Google Play. It is expected that the law will come into force on 1 January 2017.

VAT is introduced to 14 types of electronic services, including online provision of rights to use software, including games and databases. It also will relate to the provision of advertising services on the Internet, rendering of services on placement of bids for acquisition of goods and services to support electronic resources, the provision of domain names and hosting services, the granting of rights to use e-books, music, images and video.

The services in electronic form will not apply to the sale of goods if their supply is carried out without the use of the Internet, selling software and databases on physical media, the services providing access to the Internet.

Foreign companies, including to intermediary organizations need to register with the tax office and pay the tax to the added cost. The statement for statement on the account served by a foreign organization not later than 30 days from the date of commencement of the services.

According to the law, the place of supply of content foreign companies will be considered to be Russia. Existing VAT exemptions, provided that for the Russian companies remain.

In the explanatory note to the document notes that currently the Russian market is the situation in which the Russians more profitable to buy the above mentioned content of the foreign companies, since its value in this case does not include value added tax.

According to experts, the introduction of a tax will increase the cost of the games and apps in the App Store, Google Play, Steam and other online stores in Russia.

Clifton Nichols

Clifton Nichols

Hi! I’m Clifton and I am a full-stack engineer with a passion for building performant and scalable applications that are beautiful and easy to use.

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