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“Google tax” will increase the price of apps in the App Store by 15%

Passed the first reading “tax on Google” can hit to foreign Internet sites, including app stores App Store and Google Play. Under the bill, foreign companies selling software in Russia, will be subject to VAT at 18%.

The so-called “tax on Google” implies the introduction of VAT on products of foreign IT companies operating in Russia. Expected percentage that will be charged to the earnings of foreign companies amount to 18%. The creators of the bill hope that the tax will bring to the budget more than 50 billion rubles a year. The initiative is aimed primarily at software and other content that is sold through Internet shops. The law will enter Play store, App Store, Steam, PSN, and many other venues.

Co-founder of Colibri Games Andrey Harutyunyan in an interview with “the Newspaper” told how, in his opinion, may affect the tax on the mobile gaming industry.

“Practice of implementation of this law in Europe shows that the cost of games is growing rare. Basically, it turns out that less is starting to get the developer, as all platforms deduct this VAT from payments by developers. To raise the price of legacy applications is not the best strategy for a developer, but new games can already consider this factor”, — said Harutyunyan.

Foreign companies on the new rules can respond simply to increase the price by the appropriate VAT amount, and eventually this tax will be paid by the buyer. The developer notes that greater clarity after the second reading, as it was then planned to make a large number of edits. According to experts, the increase in the cost of digital content to users may be 10-15%.

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Similar laws are already in place abroad. So, in the European Union, Japan and South Korea tax in the country where the company implements its own products or IT solutions. The introduction of the tax will concern the whole range of products and solutions to IT companies. This includes SOFTWARE, games, programs for blocking banners, filters for web sites, programs for accounting and antivirus programs.

In addition to these specific product tax will be imposed and services provided by the companies. The list includes the provision of advertising services, provision of access, storage and processing of data, communication services, broadcasting of TV and radio programmes via the Internet, as well as providing access to audio, video and print content.

In the end, a large part being implemented in Russia products rise in price, and this is all against a rise in price from-for rouble exchange rate, experts state.

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