The Russian Ministry of Finance has decided to change the tax legislation to be able to tax the revenues that Google and Facebook gain from their Russian audience. The internet companies operating in Russia will be required to submit declarations of their incomes in Russia.
A clause changing the approach to the taxation of global internet giants has been added to the new version of the Guidelines on the Budget, Tax and Customs Tariff Policy in 2020 and for the Planning Period of 2021 and 2022 published this week.
The international internet corporations currently pay taxes on the real seat principle (in the country where they are headquartered). But their headquarters are usually registered in offshore jurisdictions or tax havens. The European offices of major international companies such as Google, Facebook, or Microsoft are registered in Ireland. According to the Ministry of Finance calculations, the effective rate of taxation of their profits is far lower than that companies in other industries pay.
At the same time, many Russian IT companies opt for transferring their headquarters abroad; for example, videogame developer Playrix has moved to Ireland, RBC reports. On the other hand, many of the largest international internet companies register subsidiaries in Russia, but they are not seen as Profit Points.