Russia Imposes New Tax On Digital Services From Foreign Companies

JAKARTA - The Russian government on Tuesday, September 14, published a plan to impose a new tax on foreign-owned digital services that will take effect in November. It is part of a package of proposals that Moscow says are aimed at supporting its domestic technology sector.

The proposed tax on foreign technology companies has been filed as part of an international effort to approve new global tax rules to better collect the revenue that big tech companies generate as they shift profits to low-tax jurisdictions or countries.

Deputy Finance Minister Alexei Sazanov said earlier this year that large foreign digital companies providing services in Russia should be taxed on profits. Moscow is engaged in discussions with the Paris-based Organization for Economic Cooperation and Development (OECD).

But in the case of Russia, the move also comes amid broader efforts to strengthen internet controls and promote domestic alternatives to the services offered by the Silicon Valley tech giant.

Russia has been trying to force foreign companies to open offices on its territory and store Russian personal data there.

Other measures that have gone into effect this year include a series of tax cuts for domestic IT companies. Subsequent laws required smartphones, computers, and other devices purchased in Russia to offer users pre-installed Russian software.

The Russian government also announced a package of additional measures last Tuesday, also seeking to increase demand for domestic technology products and accelerate the digital transformation of parts of the economy.