Russia’s government is pushing to raise taxes on US internet companies such as Google, Apple and Microsoft, in a bid to help domestic competitors in the country.
In an interview with Bloomberg, the government’s first internet adviser, German Klimenko, said he wants to raise taxes on the companies to help level the playing field for Russian competitors such as Yandex (which has been embroiled in a spat with Google) and Mail.ru.
Klimenko, who was appointed six weeks ago by President Putin, is putting his support behind a bill that would apply an 18 per cent value added tax on the first $3.9 billion of revenue earned by the foreign companies.
This would cover a dozen digital products and services on which domestic companies pay VAT, but a majority of foreigners do not, including games, ads and cloud computing.
He is also pushing for a ban on Microsoft Windows from government computers, amid privacy concerns.
“We are breeding the cow and they are milking it,” said Klimenko.
His offensive comes as the European Union said it could look into the amount of tax internet companies pay in the continent, amid a well-publicised tax issue involving Google in the UK.
The country’s government said last month Google had agreed to pay £130 million in tax for its operations in the UK since 2005, despite generating an estimated profit of £7.2 billion over the period.
The controversial tax deal was labelled as “derisory” by the country’s opposition party, and has led to growing anger at low tax rates for large companies.
Google boss cashes in
The growing outcry has however not stopped Google from awarding its chief executive, Sundar Pichai, a bumper share package, which made him the highest paid chief executive in the US last year.
According to a regulatory filing, the executive was awarded shares worth $199 million (£138 million) in Alphabet, Google’s holding company, taking his total personal stock value to approximately $650 million.
Notably, the award is £8 million more than the company paid in tax in the UK for ten years of operation.