The law on "landing": how serious is everything, and which IT companies will fall under its action

Yesterday, the Cabinet of Ministers supported the so-called “landing” law, which will oblige large foreign IT companies to open branches in the territory of the Russian Federation. Roman Lukyanov, Managing Partner of Semenov&Pevzner Law Firm, in the column for App2Top.ru I have sorted out the key issues to the law. In particular, about the seriousness of the Government’s intentions and the criteria for selecting legal entities and individuals who fall under its action.Roman Lukyanov

How likely is it that the law will be adopted after all, since it was approved by the Cabinet of Ministers?

Speaking about the approval of the Cabinet of Ministers, it is important to understand the mechanics of the process of consideration and adoption of bills.

The conclusion of the Government of the Russian Federation is mandatory in the following cases:

• if the draft law introduces or abolishes taxes, or mechanisms for exemption from their payment;the financial obligations of the state are changing;
• if the bill provides for expenses covered by the federal budget.
• In my opinion, this bill did not require and does not require a mandatory conclusion of the Government of the Russian Federation, so the very fact of its existence is not key to its future fate.

However, the chances of the bill’s adoption are quite high. This is indicated by the following factors: the support of the government, the status of the deputies who submitted the bill for consideration, the recommendation of the Information Policy Committee to adopt it in the first reading and the presence of certain political trends on this issue.

Which companies will have to open branches in Russia?I would like to note that we are talking, among other things, about individuals engaged in relevant activities.

Firstly, a company (or an individual) should have a daily audience of 500 thousand users located in the territory of the Russian Federation.

• the information resource provides information in Russian, the languages of the republics of the Russian Federation and other languages of the peoples of the Russian Federation;advertising aimed at attracting the attention of consumers located on the territory of Russia is distributed on a foreign resource;
• a person processes information about users located on the territory of the Russian Federation;
• the person receives funds from Russian individuals and legal entities.
• The bill covers not only media and platforms where information is distributed, but also:
  

• foreign hosting providers or other persons providing the placement of information resources on the Internet, whose users are also located on the territory of the Russian Federation;foreign advertising system operators are persons who ensure the functioning of information systems and computer programs designed to organize the distribution of advertising on the Internet.
• Such advertising should be placed on third-party websites accessible to Russian users.;foreign persons who ensure the functioning of information systems and/or software for receiving, transmitting, delivering and/or processing electronic messages from Internet users of Russian users.
• In this case, we are also talking about messengers.What are the questions to the bill?

The description of some categories of persons falling under its scope is formulated very broadly.

It is not completely clear who exactly should open a branch, representative office or a separate legal entity in the Russian Federation. First of all, this concerns special categories and criteria for accepting payments and processing personal data.

There is also no clarity on the issue of taxation of foreign persons who should be localized. The fact that Russian tax legislation will apply to them in some part is a given, but to what extent and how companies should adapt their business structures is an open question.

Localization is carried out, among other things, in order to create conditions for the application of state coercion measures to foreign persons (legal sanctions). In this sense, it is not fully clear how the responsibility of the foreign person himself can be assigned to a Russian legal entity if localization is implemented in this form.

There are also quite a lot of issues of editorial, legal, technical and procedural order. In general, attention is drawn to them in the conclusion of the legal department of the State Duma.

Amendments to the draft law must be submitted by June 4. After that, obviously, the bill will be actively prepared for the second reading.