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Play Store App Purchases May Soon Attract 18% VAT In Russia

February 9, 2016 - Written By Kishalaya Kundu

Google’s troubles in Europe doesn’t seem to be going away anytime soon. The American tech giant has been mired in one controversy after another in several countries on the continent over the past few years. Just a few weeks back, the UK decided that the search giant has to pay £130 million in back taxes, after a six year long investigation by Her Majesty’s Revenue and Customs (HMRC) found the company guilty of systematic tax evasion. The European Commission, meanwhile, has been carrying out its own investigation into Google’s business practices, whereby, the Commission’s antitrust chief, Ms. Margrethe Vestager, is investigating whether or not the company unfairly leverages its position of preeminence in Search and Android to stifle competition.

Now, Google is again at the eye of a storm, but this time around, in Russia, where, Mr. German Klimenko, the newly-appointed ‘Internet Advisor’ to the Russian President, Mr. Vladimir Putin, is now apparently wanting US-based tech companies like Google and Apple to start contributing more to the country’s exchequer. Many sceptics, however, claim that the new plans are designed towards helping local Russian companies like Yandex and Mail.ru compete better against foreign firms. What must add to the discomfiture of the top management at the Silicon Valley companies, is the fact that a controversial lawmaker in the country, Mr. Andrey Lugovoi, is now sponsoring a bill, which proposes to add an 18 percent VAT to sales on the Google Play Store and Apple’s App Store. In related news, Mr. Klimenko is also seeking a ban on Microsoft Windows as the operating system of choice on government computers, claiming that the software is a threat to the country’s national security.

Sadly for Google, with political relations between the US and Russia at an all-time low since the end of the cold war, this is not the first time that the company is facing severe censure in one of the last remaining large developing markets on the continent. Late last year, Russia’s Federal Anti-Monopoly Service (FAS) ruled that the American tech company had violated Russian antitrust laws by allegedly forcing manufacturers to pre-install its services on their Android devices. The FAS had opened its investigation based on an earlier complaint by Russian search engine operator, Yandex NV. Of course, it would be wrong to blame all of Google’s European woes on the deteriorating political relations between the two former cold war rivals, as the company is currently besieged from all quarters on the continent, being made to publicly and legally defend many of its allegedly-controversial business practices.