«Google tax» payment will be easier

New rules for paying “Google tax” – VAT that is paid by foreign companies which provide electronic services to Russian customers – have entered into force in Russia since January 1, 2019.

Previously this tax was paid by the customers instead of foreign companies-sellers.  Now, according to the new rules, foreign companies must register in tax authorities and pay taxes on their own.

This innovation became suitable neither for foreign companies, nor for Russian customers.

The obligation to register in Russian tax authorities and to pay VAT independently has become a serious obstacle for foreign companies wishing to enter Russian market. At the same time, Russian companies have also suffered from new mechanism – some of them could not receive VAT deduction, since foreign sellers do not always correctly allocate VAT in their accounting documents.

Russian tax authorities listened to the arguments of the companies and prepared a draft letter, which allows Russian buyers to pay “Google tax” according to the old rules.

In this regard, we are expecting for official publication of this letter.