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    Saturday 19 January 2019

    Russian tax implications for Google

    Russia’s new procedure for payment of VAT in 2019 by foreign companies that provide electronic services to Russian buyers.

    Starting from January 1, 2019, the procedure for payment of value added tax for rendering services in the electronic form by a foreign company that does not have a representative office in Russia is changed.

    For example, a foreign company provides advertising or website maintenance services to a Russian company via the Internet.

    Or

    A contract for the use of the software has been concluded between a foreign parent company and its Russian subsidiary.

    Until January 1, 2019, the payment of value added tax on services provided by foreign companies to legal entities was carried out by the Russian company as a tax agent. At the same time, operations on license and sublicense agreements were not and are not subject to value added tax.

    Starting from the next year, the obligation to pay value added tax on such transactions is imposed on a foreign company, which will have to:

    • first, register as a taxpayer with a tax office;
    • second, submit value added tax returns;
    • third, pay tax on their own.

    At the same time, if the operation is not subject to VAT, foreign companies should not pay tax, but have to register and submit tax returns to the tax office.

    Please, note that rendering electronic services without registration with tax authorities may lead to a criminal liability. If the amount of a tax liability will be more than 1.5 million rubles, these operations can be qualified as illegal business.


    For more information, contact:
    Olga Ilina
    ICLC, Russia
    E: ilina_om@iclcgroup.com

    Russia’s new procedure for payment of VAT in 2019 by foreign companies that provide electronic services to Russian buyers.

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