Digital services: Russian Government plans to impose new taxes on foreign tech firms

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Digital services: Russian Government plans to impose new taxes on foreign tech firms
Digital services: Russian Government plans to impose new taxes on foreign tech firms

Large foreign digital companies providing digital services in Russia should be subject to profit taxes

A plan on Tuesday to impose new taxes on foreign-owned digital services by November was published by the Russian Government, part of a package of proposals Moscow says are aimed at supporting its domestic tech sector.

As part of an international effort, the proposed tax on digital services by foreign tech firms has been presented to agree new global tax rules to better capture revenues generated by big tech firms known for shifting profits to low-tax jurisdictions. Alexei Sazanov, the Deputy Finance Minister said earlier this year that large foreign digital companies providing digital services in Russia should be subject to profit taxes, and that Moscow was involved in discussions with the Paris-based Organisation for Economic Cooperation and Development (OECD).

But in Russia’s case, the move also comes amid a wider effort to strengthen control of the internet and promote domestic alternatives to the digital services offered by Silicon Valley.

Russia has been seeking to force foreign firms to open offices on its territory and store Russians’ personal data there.

Including a series of tax cuts for domestic IT firms, other measures have already come into effect this year. Offering users pre-installed Russian software in smartphones, computers and other devices purchased in Russia is required as a subsequent law.

Tuesday’s package of additional measures seeks to increase demand for domestic technology and accelerate the digital transformation of parts of the economy, the government said in a statement.

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