The State Duma introduced a bill introducing a tax on downloading applications from the App Store and Google Play
Welcome to our readers on the iCover Blog Pages ! On Thursday, December 24, a bill was submitted to the State Duma that would impose tax on content purchased by users from foreign IT companies. In particular, we are talking about paying tax when purchasing applications in the App Store and Google Play content stores. According to the authors of the bill, the price of the issue for the market, if adopted, could amount to tens of billions of rubles annually.
State Duma deputies Andrei Lugovoi and Vladimir Parakhin (LDPR) proposed their own option of filling the state budget, who introduced a bill to the parliament on taxation of VAT when Russian users purchase content and software from foreign developers. The document also involves VAT on the sale of software of domestic developers, sold on the Russian market. Note that to date, software sold in Russia is not subject to value added tax.
As a compensation measure, Russian companies are offered a VAT offset from the sale of software abroad. The bill provides for some preferences regarding the income tax on the sale of content. In this case: the costs of selling domestic content “may be recognized for profit tax purposes in an amount exceeding the amount of actual costs”.
Recall that earlier the idea of abolishing zero VAT on the sale of foreign software and content was already born in the offices of the Ministry of Communications, which proposed to send the budget revenues to support Russian software companies. The ministry had to abandon these plans after the President in a message to the Federal Assembly in December 2014 called for fixing the existing tax conditions for the existing business four years in advance.
The Russian authorities have long been discussing likely tax scenarios for foreign technology companies. So relatively recently, or rather, in March this year, a meeting was held in the Presidential Administration with the participation of former Minister of Communications Igor Shchegolev and the presidential aide for specialized issues. After conferring, the parties agreed that the tech giants Google and Apple clearly underpaid taxes to the Russian budget. As an example, direct purchases of content in the popular online services iTunes, App Store and Google Play were cited, which are regularly made by Russian users of mobile devices. And as an alternative, it was proposed to limit the possibility of direct payment by cards of Russian banks and to withdraw VAT “on the way”, that is, at the place of purchase of the content.
The explanatory note to the current bill provided by the deputies said that today it is more profitable for Russian consumers to purchase content from foreign companies, since its cost does not include possible VAT. Thus, “foreign suppliers are automatically placed in a better position compared to Russian software companies.” The rate at which deputies propose to impose content on foreign producers is 18%. If the bill is passed, the latter will enter into force on January 1, 2017.
How can one not recall the winged one: For taxation, the moment of occurrence of revenue is important, and for the tax inspector, the moment of its disappearance.
Dear readers, we are always happy to meet and wait for you on the pages of our blog. We are ready to continue to share with you the latest news, review articles and other publications and will try to do our best to make the time spent with us useful for you. And, of course, do not forget to subscribe to our columns . Our other articles and events
State Duma deputies Andrei Lugovoi and Vladimir Parakhin (LDPR) proposed their own option of filling the state budget, who introduced a bill to the parliament on taxation of VAT when Russian users purchase content and software from foreign developers. The document also involves VAT on the sale of software of domestic developers, sold on the Russian market. Note that to date, software sold in Russia is not subject to value added tax.
As a compensation measure, Russian companies are offered a VAT offset from the sale of software abroad. The bill provides for some preferences regarding the income tax on the sale of content. In this case: the costs of selling domestic content “may be recognized for profit tax purposes in an amount exceeding the amount of actual costs”.
Recall that earlier the idea of abolishing zero VAT on the sale of foreign software and content was already born in the offices of the Ministry of Communications, which proposed to send the budget revenues to support Russian software companies. The ministry had to abandon these plans after the President in a message to the Federal Assembly in December 2014 called for fixing the existing tax conditions for the existing business four years in advance.
The Russian authorities have long been discussing likely tax scenarios for foreign technology companies. So relatively recently, or rather, in March this year, a meeting was held in the Presidential Administration with the participation of former Minister of Communications Igor Shchegolev and the presidential aide for specialized issues. After conferring, the parties agreed that the tech giants Google and Apple clearly underpaid taxes to the Russian budget. As an example, direct purchases of content in the popular online services iTunes, App Store and Google Play were cited, which are regularly made by Russian users of mobile devices. And as an alternative, it was proposed to limit the possibility of direct payment by cards of Russian banks and to withdraw VAT “on the way”, that is, at the place of purchase of the content.
The explanatory note to the current bill provided by the deputies said that today it is more profitable for Russian consumers to purchase content from foreign companies, since its cost does not include possible VAT. Thus, “foreign suppliers are automatically placed in a better position compared to Russian software companies.” The rate at which deputies propose to impose content on foreign producers is 18%. If the bill is passed, the latter will enter into force on January 1, 2017.
How can one not recall the winged one: For taxation, the moment of occurrence of revenue is important, and for the tax inspector, the moment of its disappearance.
Dear readers, we are always happy to meet and wait for you on the pages of our blog. We are ready to continue to share with you the latest news, review articles and other publications and will try to do our best to make the time spent with us useful for you. And, of course, do not forget to subscribe to our columns . Our other articles and events
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