Central regions | Finance, business | Technology & innovation
Russia calls for new tax on global Internet companies
8 Oct '19
The Russian Government is seeking to impose the corporate tax on revenues that global search engines, social media platforms, and other Internet services earn from Russian users, the U.S.-Russia Business Council and the Russian business daily RBC reported, citing a draft law on budget, taxation and tariff policies for 2020-2022 which the Cabinet introduced in the State Duma (Parliament) on September 30.
According to the Ministry of Finance, “flaws in taxation” lead to lower effective tax rates for Internet companies relative to other sectors. Under Russian law, Russian subsidiaries of global Internet companies pay the corporate tax and global Internet companies pay the VAT on revenues earned in Russia.
In 2020, the Organization for Economic Cooperation and Development (OECD) plans to propose a “common approach” toward national taxation of global Internet companies, which may include Country-by-Country reporting (CbCR), an OECD-endorsed system to promote greater transparency for tax authorities.
In January, France imposed a 3% tax on global Internet companies’ earnings in the country and some EU members are expected to follow suit in the next two years. However, the OECD warned against unilateral measures which it said could restrain investment in the high-tech sector.