The App Store and Google Play apps may be taxed
State Duma deputies propose to introduce a tax obliging foreign companies to pay VAT on the sale of all digital content sold in Russia.
The authors of the new law, which has already been prepared, but has not yet been submitted to the State Duma, were deputies Andrei Lugovoy and Vladimir Parakhin, Vedomosti writes.
“There is a situation in the Russian market in which it is more profitable for Russian consumers to purchase content from foreign companies, since its cost in this case does not include value added tax (VAT). For the same reason, these services of Russian organizations are becoming less attractive. As a result, foreign suppliers are placed in a more advantageous position compared to Russian companies,” the explanatory note to the bill says.
It is assumed that digital products of Russian companies will still not be subject to VAT. But there is a nuance. When users buy from the App Store, Google Play, Steam, Origin, Xbox Live, PS Store and so on, they, in fact, purchase products from Western companies. And, as far as we understand, in this case, even the products produced by the Russian company, but sold through the Western channel, will be considered foreign.
It is not difficult to guess that the introduction of such a tax, in case of its implementation, although it will oblige platforms to pay tax, but, in fact, it will put a heavy burden first on developers, who then, by raising prices, will transfer the problem to buyers. For the gaming market, the price increase will not turn out to be anything good, additionally – following the fall in the ruble exchange rate – hitting the number and size of purchases made in the country.
Source: Vedomosti
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