Putin supports introducing sales tax on foreign Internet companies

Vladimir Putin has ordered the government to develop legislative amendments that will provide “more equal working conditions” among Internet companies in Russia. The executive order is addressed to several branches of the state: the Anti-Monopoly Service, the Ministry of Economic Development, the Ministry of Finance, the Federal Tax Service, the Ministry of Industry and Trade, and German Klimenko, Putin's new Internet advisor.

“Ensuring equal working conditions,” the newspaper Vedomosti notes, could involve the introduction of a new tax on all sales conducted in Russia by foreign companies (such as Google and Apple).

Putin's executive order comes after a forum last December on the Internet economy, where the president met with Russian entrepreneurs. According to the announcement on the Kremlin's website, the president's order is based on recommendations by the Institute for the Development of the Internet, which Putin's new aide, Klimenko, heads as board chairman.

Last December, lawmakers in the lower house of the Russian parliament submitted draft legislation that would levy a sales tax on foreign companies' online stores. The bill would also cancel existing incentives for software developers that exempt them from certain sales taxes. Russian companies would be compensated with tax breaks for sales abroad. The Ministry of Communications has signaled its support for the initiative, saying that businesses should be taxed, if they provide services inside Russia.