The state Duma adopted a law imposing tax on the downloading of apps from the App Store and Google Play

On Wednesday the state Duma adopted in the third reading the draft law on the introduction of value added tax (18%) for foreign companies trading via the Internet is electronic content in Russia. In particular, we are talking about the tax payment when buying a mobile apps in the App Store and Google Play. The document was approved by a majority of votes (330 vs 50).

The bill affects virtually all domains of services in the IT market. He obliges foreign companies that sell software, games, music, movies and other content and services (including advertising), to pay VAT. They must register with the IRS, and then report the sales on the territory of Russia. Russian buyers will be identified by credit card number or IP address. Companies that refuse to pay taxes, accused of tax evasion.

The law on “tax on Google” to the state Duma in December 2015. It is intended to equalize the status of foreign and Russian companies (Mail.Ru Group, “Yandex”), who are now paying sales tax e-services. Document affect such companies as Apple, Google and Microsoft.

In the case of the bill the Federation Council and approval by the President it will come into force on 1 January 2017. The Finance Ministry expects that the law will bring the country’s budget to 10 billion rubles.

In June last year it was reported that the Ministry of Finance decided not to tax telecommunications services, which foreign IT-giants have in Russia. This means that when you buy apps, video and audio content in the virtual store Russian users, VAT on these services are not paid to the Russian budget.

Then the initiators of the idea to the staff of the presidential administration, representatives of Roskomnadzor and the state Duma decided that Apple and Google are definitely underpaid taxes to the Russian budget. As an example, consider the situation when the Russian users buy from the online stores iTunes App Store and Google Play apps, music and movies to their mobile devices, these payments are not taxed in Russia, purchases are made directly from foreign companies.

According to analysts, the introduction of the tax could lead to an increase in 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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