Prices for IAP and Google Play apps will rise in Russia

From January 1, Google Play pays value added tax (VAT) from payments in Russia. In this regard, prices for end users will increase.

The Internet giant Google has sent letters to Android developers. In them, he informs that due to changes in Russian legislation, he will be forced to pay VAT in Russia from January 1. Those developers who paid VAT in Russia from their sales should no longer do this.

The consequence of the introduction of the tax will be an increase in the cost of content for end users. They will pay additional interest on the payments made, which Google will then pay to the Russian state.

“In countries where developers are responsible for paying VAT to the tax authorities, Google transfers all taxes collected to them and calculates an operating fee of 30% of the net price of the goods,” the Google Play help says.

Previously, companies selling digital products through Google Play in Russia were themselves responsible “for the calculation and payment of taxes in all relevant jurisdictions.”

On June 15, 2016, the Duma of the Russian Federation adopted a law on levying a 15.25% tax on the sale of any digital content by foreign companies. It comes into effect on January 1, 2017.

The problem is that for Russian companies we are talking about double taxation.

Sergey Galenkin – Head of Publishing for Eastern Europe at Epic Games
“For Russian developers, there is a problem of double VAT, which, unfortunately, was not taken into account in the law.

The fact is that most Russian developers sell their games through platforms (Steam, App Store, Google Play), and not directly. This leads to the fact that VAT is paid twice from the same purchase – first it is paid by the site in Russia, and then by the developer company when it receives its money for a Russian legal entity,” Sergey Galenkin commented on the law in an interview with us back in the summer of this year.