The Ministry of Finance decided to force Google to share revenues

The Ministry of Finance has already forced Google and other tech companies to pay VAT in Russia - now the department wants to receive more income tax from them. A proposal appeared in the "Main Directions of the Budget and Tax Policy for 2020-2022" that digital corporations declare income from the Russian audience in Russia, writes RBC.

Details. Anton Siluanov's office believes that there are "significant shortcomings" in the current principles of taxation of digital corporations. Because of them, “the effective rate of taxation of the profits of such companies turns out to be significantly less than for companies in other industries,” the Ministry of Finance complains.

• Corporations that operate worldwide pay income tax at the place of registration of the head office. Headquarters, as a rule, are registered in countries with relatively mild tax laws, for example, in Ireland, where the income tax rate is 12.5% ​​and where the head offices of Microsoft, Google and Facebook are registered.
• The Russian Ministry of Finance is confident that digital giants must declare income for tax purposes in the jurisdictions where their customers and users are located.

The main difficulty in solving such issues is how to calculate the share of a particular country in the profits of a transnational company, Alexander Zakharov, partner of Paragon Advice Group, told RBC.

Quote. “What is more important when determining the value of intangible assets: in which country was the source code written or where was it significantly improved? It's like deciding what is more important in a car - the engine or the body," he added.

Apart from the corporations themselves, no one has data on profits by country. “The only solution, in my opinion, is if the IT giants themselves honestly disclose how much they have earned from users in a particular country,” Zakharov believes.

• In Russia, income tax is paid by subsidiaries of international corporations. The latest open data of the Federal Tax Service is for 2017, five companies are mentioned in them.
• Most of all taxes - 1.9 billion rubles - in 2017 in Russia were paid by Microsoft Rus LLC. For comparison, the "daughter" of Samsung in the same year paid 254 million rubles in taxes.
• Since 2017, the so-called “Google tax” has been in effect in Russia – digital companies are required to pay VAT in Russia.