At the beginning of 2017, a bill called the “Google tax” came into force in Russia. We will figure out how good and not very threatening is its introduction for global corporations and individual users, as experts commented on whether it is possible to avoid paying it.
Summary of the bill
The Google tax, which entered into force on January 1, 2017, was adopted by the State Duma of the Russian Federation more than six months before that - on June 15, 2016. The bill obligated foreign companies selling their products or services via the Internet to pay VAT on their activities. Therefore, to the question: "What is the percentage " of the Google tax ? " you can easily answer - 18%.
The initial draft proposed by the deputies from Just Russia and the LDPR, Vladimir Parakhin and Andrei Lugov, envisaged the introduction of this tax on the products of not only foreign IT companies, but also Russian ones. However, in this version he was severely criticized. The present version of the project was supported by 330 deputies out of 383.
Pros and Cons of the Bill
The Google tax law has two obvious advantages. The first is additional revenue to the state treasury. It is estimated that in 2017 the income from the activities of foreign IT companies can exceed 10 billion rubles. The second advantage is that the law does not touched on Russian developers - this will make their products more affordable and thereby more attractive.
However, the drawback of the bill also applies to developers - those who promote their projects on the foreign Play Market, App Store, etc. Naturally, it is inappropriate to raise prices for already released games and applications - the introduction of the law will affect the cost of new developments. Therefore, the second, very significant minus will affect end consumers: the amount of products will increase according to VAT, and the buyer will be forced to pay it from his wallet.
Expert Comments
We’ll take a look at the comments on the “Google tax” of experts who were directly affected by the new project:
- Nikolai Nebyshenets , general manager of Wargaming in the CIS countries, told reporters that he had long been expecting the introduction of such a tax in Russia - according to the trend of world practice. For consumers of his company's products, the collection concerned primarily in-game acquisitions. He believes that the burden of the 18% tax will ultimately be passed on to the players.
- Ilya Karpinsky , deputy The head of the game line Mail.Ru Group, believes that the consequence of the adoption of the bill will be an increase in prices for applications, games, programs displayed on the sites of foreign Internet markets. However, this will not scare off the latest Russian developers, who, with the help of the same “Play Store” or “App Store”, receive the vast majority of their income.
- Sergey Orlovsky , the founder of Nival, notes the main omission of the recently adopted “Google tax” is double VAT. The first time it is paid by a platform, for example Steam or Google Play, selling the program to the consumer. The second time the tax for the same name is sent to the state to the treasury when transferring funds for products sold from the Internet platform to the developer of this application.The expert also believes that the tax will weaken the already precarious positions of the electronic services market, which, in turn, can lead to a significant reduction ju its diversity.
- Anton Yudintsev , co-founder of Gaijin Entertainment, shares the sad conclusion - the introduction of a new tax will first of all hit direct consumers, which will lead to a decrease in the volume of purchases of electronic services. Such a turn of affairs will be unfavorable for Russian developers of mobile applications and will lead to a slowdown in the development of the domestic IT sector.
The experience of other countries
“The Google tax in Russia is not the only one of its kind. Large US technology corporations pay similar VAT in the Netherlands, Luxembourg and Ireland. But at the same time, these states offer the minimum tax burden, a kind of“ tax haven ”.
Since 2015, discussions have been held on the introduction of a single tax in the EU, similar to the Russian one, which would also affect the interests of the mentioned IT companies from the USA. Similar to VAT, fees from technology firms and corporations operate in South Korea and Japan. However, in size they are noticeably inferior to the Russian "Google tax" - 10% and 8%, respectively.
Who pays Google tax
There are two ways to transfer the "tax on Google" to the treasury:
- Payment of tax by a foreign corporation. In this case, the latter must provide electronic services to a private person (Russian citizen) in accordance with a direct agreement.
- Payment of tax by the addressee to whom the service was provided. In this case, the consumer can only be a legal entity - an individual entrepreneur, a Russian organization, or a representative office of a foreign company in the Russian Federation. Payment is paid by them as tax agents.
If a foreign company acquired electronic services from a foreign IT company, then both parties to the transaction are eligible not to pay the “Google tax”.
Taxpayer companies
According to the Federal Tax Service, 111 foreign technology companies have already registered. Among them are the following corporations:
- Google, in particular Google Play (by the name of this corporation they dubbed the law in the media);
- Apple (including the App Store);
- Microsoft
- Financial times;
- Aliexpress;
- Facebook Inc;
- eBay
- Netflix International BV, Wargaming Group Ltd;
- Bloomberg;
- Steam
- Chelsea et al.
Similar domestic corporations - Yandex, Rambler & Co, Mail.Ru Group, also pay taxes, following Russian law.
Consumers accumulating the law
A Google tax is appropriate when the aforementioned foreign company sells its electronic products or services to a Russian buyer - a person located in the Russian Federation. It may be:
- IP, an organization registered in Russia.
- An individual who:
- lives within the Russian Federation;
- pays the bill with a card of a Russian bank or electronic money transfer operator;
- has a network address that determines its location on the territory of the Russian state;
- uses a telephone number for the services whose international code is Russian.
What is subject to a new tax
18% of the Google tax in Russia today is paid on purchases or use of the following types of products and services:
- video, audio, graphics, music, e-books;
- mobile applications, computer programs, video games;
- hosting providers;
- advertising platforms;
- online auctions;
- platforms for placing various announcements of sale, purchase, lease, provision of services, etc .;
- automated search services;
- domain registration;
- Cloud data storages
- providing statistics on visits.
A full list of products and services can be found when reading a new article No. 1742 of the Tax Code of the Russian Federation. It is worth noting that under Google-taxation does not fall:
- the provision of services, goods, works ordered via the Internet, but delivered or completed without his help;
- sale, transfer of ownership of information data on tangible media, including software, computer games;
- providing access to the World Wide Web;
- consultation by email.
Bypass Google tax: mission feasible
The introduction of the new tax did not at all please users who often buy applications and paid add-ons, extensions and premium versions for them through the Google Play, App Store, etc. He also touched users whose profile in games is tied to a Google account. Currently there are three unofficial ways to save 18% of the new cost of content:
- Make a purchase through Facebook, linking your account to a profile on this social network.
- Pay via Pay Pal.
- Change the country of location in the Play Market to Belarus, Ukraine or any other country that does not have such a tax. Such an operation is done through special applications that change this information in the user ID.
The law also affected many entrepreneurs who advertise their products or services through Google AdWords. How to get around the "Google tax" is completely legal in this case? There are the following ways:
- Payment for advertising through an account of a legal entity registered in the USA.
- Pay for advertisements through a private, individual resident in the United States.
- Purchase or rent an old Google AdWords account that was registered before 2007. The first operation will cost about 3,000 euros, and the second - about 200 dollars. This case is very unreliable - when transferring an account, you can easily become a victim of scammers.
- Reimbursement of tax paid from the budget - the scheme is valid only for taxpayers on many unprofitable system of general taxation.
- Payment for submitting an advertisement through a person registered in Belarus or Ukraine. The disadvantage of this method is that having, for example, a Ukrainian Google AdWords account, you need to pay all bills with a bank card of this country.
"Google tax", designed to increase revenue in the Russian budget, according to experts and ordinary users, is untimely, incomplete and unnecessary. The consequence of its adoption was that foreign IT corporations shifted the payment of the VAT introduced for them to consumers of their products and services, increasing the cost of the latter by 18%, which could not but lead to a decrease in the number of purchases. Since the main content providers for the Russian buyer were domestic developers, the innovation painfully hit them too.