The reaction of companies to the introduction of a “tax on Google” in Russia
From 1 January 2017 in Russia will come into force so-called “tax on Google”, which will affect foreign companies that provide Russian customers of electronic services. To raise prices for digital content on 18-20% already announced by Google, Nintendo and Amazon, but their list is not limited. Market participants expect that changes in pricing will hold the other sellers games and foreign live theater.
Foreign companies selling software and services via the Internet, began to warn the Russian users about the price increase caused by the entry into force of the “tax on Google”. So, Google itself is still in early December alerted Russian developers and owners of paid subscription for storage “Google Drive” for inclusion in the new year in the cost of the service VAT 18%. Now subscribe to the extra space of 100 GB per month in the cloud service “Google Drive” is 139 rubles, 1 TB — 699 rubles; 10 GB — 6990 rudders, 20 TB – 13 990 rubles, 30 TB – 20 990 rubles. On Monday the company said that a notice about a similar price increase get users of other services of the company, including, for example, “Google Play Music”. The user can unsubscribe. Now “Google Play Music” is 159.per month.
About plans to raise prices in Russia due to new law prevents and Nintendo. The company said that since mid-December prices on Nintendo eShop improved by approximately 20%. In this change in addition to VAT and inherent correction associated with the dynamics of the ruble. Price increase also said publisher computer games CreaGames, earning money through microtransactions in-game model Free2play. In addition, last week, customers of Amazon Web Services (AWS) cloud platform Amazon web services, received a letter in which the company affirms that it will be forced to charge VAT at the rate of 18% from 1 January next year.
The law on so-called tax on Google will start to operate on 1 January 2017. Foreign companies selling electronic content or software through the Internet in Russia will have to register with service tax and pay VAT on a par with Russian companies operating in the same market segment. Earlier, Deputy Minister of Finance Ilya Trunin reported that the government expects “at first” to receive from the taxation of foreign Internet companies to 10 billion rubles.
In the Russian office of Microsoft announced that “do not comment on regulatory issues”, noting that “Microsoft will be submitted to FNS and will provide appropriate reports”. Apple did not respond to a request, however, analysts expect growth of cost of the games and apps in the online App store by 30-50%.
According to the Vice-President, strategy developer and game publisher Nekki Sergey Babaev, Steam is likely to raise prices. “He was among the first who reacts on changes of the ruble, I think, and the taxes will react”,— said Mr. Babayev. In 2016 the Russians have spent through Steam about 3 billion rubles.
Not likely to be spared higher prices, and users of foreign online video services. Judging from what Google has already announced higher prices for their services, Netflix is also going to change the price of a subscription, considers the General Director of the Association “Internet video” (ivi.ru, Megogo, TVZavr, Amediateka and TV1000Play) Alexey Burdin. “However, hardly it will seriously affect Russian consumers because of the service subscribers in our country not so much,” he adds.
Russian market participants are glad “tax on Google”: according to Byrdina, he “introduces parity” pricing of Russian and foreign video services. Now monthly subscription to Netflix costs between 649 and 949 from
“The Russian services VAT is always included in the cost of digital products, due to which foreign counterparts have had more advantages and was using it for dumping the market”— agrees the General Director of Megogo in Russia Viktor Chekanov. The tax will equalize the price of the content, which will allow Russian services to compete on equal terms, he is happy.