Tuesday, May 31, 2016


Russia

Kremlin Considering 'Google Tax' On Technology Services

The Kremlin's Internet adviser, German Klimenko, meets with President Vladimir Putin. (file photo)
The Kremlin's Internet adviser, German Klimenko, meets with President Vladimir Putin. (file photo)
By RFE/RL

A top Kremlin adviser is warning that Russia may move to tax Google, Apple, Facebook, and other global technology companies to put them on a more equal footing with Russian tech firms.

"There should no doubt be equality of Russian and foreign companies before the law," German Klimenko, the Kremlin's adviser on the Internet, told Russian News Service radio on February 1, noting that taxing foreign companies is "absolutely normal" in Western countries.

"I'd like to know how much Google earns on the territory of Russia and to add 18 percent to it," he said. "I'm really interested in the figure. When we learn it, then we'll make conclusions." 

Klimenko, an early Russian Internet innovator, was appointed as President Vladimir Putin's Internet adviser in December. 

His suggestion of a kind of value-added tax on technology services in Russia comes only days after he asserted that Google, Facebook, and other social-media companies will be blocked in Russia “sooner or later” if they do not comply with a law enacted in August requiring them to locate facilities that store Russia data in Russia.

And it comes after Russian news agencies reported that Putin on January 29 signed an executive order asking federal agencies to work with Klimenko on amending legislation to ensure equal operating conditions for companies within Russia with respect to the Internet.

The Kremlin gave the agencies until September 1 to submit proposals. On its website, the Kremlin said the president’s decision was based on recommendations made by the Institute for the Development of the Internet, which Klimenko heads.

“Ensuring equal working conditions may involve, in particular, the introduction of a value-added tax on the sale of services in Russia by foreign companies such as Google and Apple,” Moscow’s Vedomosti newspaper reported on February 1 in an article detailing Putin’s support for a so-called “Google Tax.”

Lawmakers in Russia’s parliament previously have proposed legislation that would add sales taxes to products and services sold through the online stores of foreign companies

While the Google tax proposal would not be welcomed in Silicon Valley, it is toned down from previous Klimenko warnings that Moscow will ban the tech companies from operating in Russia unless they comply with the local storage law. Last week, he said such a ban would help Russian web firms to thrive.

“Currently, both Google and Facebook do not cooperate with our law-enforcement agencies,” Klimenko told the news site Gazeta.ru. “Needless to say, sooner or later the issue will come up and sooner or later they will have to comply with our laws or leave the territory of the Russian Federation.”

“What will happen if the government bans Google and Facebook? " he asked. "The answer is stupidly simple -- Yandex and the rest will begin to work more, once they receive a bigger slice of the pie,” he said, referring to the Russian-based search engine that competes against Google.

“From a purely financial point of view, if Google stops functioning in Russia, Yandex will start earning more,” he said.

Google also has been targeted by Russia’s Federal Anti-Monopoly Service, which ruled in September that the California tech firm had violated a “protection of competition” provision by prioritizing its own services over those offered by Yandex.

The U.S. company has since been ordered to change the way its apps come preinstalled on Android smart phones, or risk paying upwards of 15 percent of its local revenue to Russian authorities.

With reporting by TASS, Washington Times, Reuters, Vedomosti, Gazeta.ru, and Newsweek

Most Popular

Editor's Picks