Russia Moves to Tax Apple, Google and Netflix

Associated Press
Russia's Foreign Ministry Building in Moscow

The measure was overwhelmingly supported by local competitors.

An initiative to slap taxes on digital sales by Apple, Google Play and Netflix, overwhelmingly supported by local online video services, has been approved by the Russian government and is expected to be implemented as of 2017, it was announced Tuesday.

President Vladimir Putin ordered that relevant state agencies prepare changes to the country's legislation aimed to "ensure equal conditions for online companies' operation in Russia" by September, the president's website reported. The measures are expected to come into effect as of next year.

Last week, local online video services complained that foreign companies selling digital content in Russia, such as Netflix, Google and Apple, have an upper hand over them as they don't pay VAT, which in Russia amounts to 18 percent.

"Our intention is to comply with applicable laws and regulations as our service rolls out globally," a spokesman for Netflix, which launched in Russia in early January, told The Hollywood Reporter.

A spokesperson for Google declined to comment. Apple could not be reached for comment at the time of writing.

An exemption from VAT was originally adopted in Russia for foreign software developers and was subsequently applied to software sales on Apple's AppStore and Google Play and later to sales of movies and music on iTunes, Google Play Music and Netflix.

Meanwhile, local competitors may want more restrictions on Netflix's operations in Russia.

Sergei Petrov, deputy general director of CTC Media, which runs the online video service, was quoted by local news agency Tatar-Inform on Tuesday as saying that Netflix has an advantage over local competitors as, in addition to paying less taxes, it has exclusive rights to many foreign TV series and movies.

Later, Petrov said it was just a tentative idea that needs further discussion.