According to new regulations foreign based providers of electronic services are required to pay VAT for business conducted in Russia.  The law defines electronic services as the granting of rights to use computer programs through internet. Such programs include games, content databases, advertising services, on-line trade, electronic books, music and video content etc. 

Foreign companies rendering such services can pay value-added tax online directly to the tax authority.  There is an opportunity to be registered on the website of the Federal Tax Service (FNS): an online account enables to file VAT declarations, exchange documents and correspondence.

According to the Federal Tax Service as of February 21st, 2017, 59 foreign companies have registered as VAT payers. These companies include Apple, Google, Microsoft, Netflix, Samsung, Bloomberg, Amazon, eBay, Nintendo, Booking, Alibaba and many more in this list.  Another 40 companies have applied.

This new requirement levels the playing field for local providers of digital and e-commerce services who have been paying VAT, while foreign companies did not.  There will also be the added benefit of more taxes flowing to the State.

The amendments to the Tax Code of the Russian Federation were introduced by the Federal law as of 03.07.2016 No.244-FL “On introduction of amendments to the first and second parts of the Tax Code of the Russian Federation”.  The new regulation is effective as of January 1st, 2017.

Source:  Credinform Russia