Foreign IT cos working in Russia start paying local VAT from Jan 1

MOSCOW, Jan 9 (PRIME) -- Foreign information technology companies, working in Russia, started paying the value-added tax (VAT) to the country’s budget from January 1 for selling electronic services on the local market, according to a law signed by President Vladimir Putin in July 2016.

The tax will be paid by the companies providing via the Internet rights to use software, including games and databases, as well as online services of advertising and digital content, like electronic books, music, video and access to domains and hosting, and the like.

The law obliges such companies to join a special tax register, like their local counterparts do. The Federal Tax Service will launch a new online service to interact remotely with companies.

In case of disrespect, foreign companies will be held liable for illegal entrepreneurship.

The initiative is aimed at drawing Russian Internet companies out of offshores, customarily used to pay less in taxes, back to the country, among others.

In December 2016, U.S. behemoth Google notified users of an increase in charges for exploitation of file cloud storage Google Drive because of the new law.

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