The Russian government has approved a proposal to tax digital sales by Apple, Google Play and Netflix, a move which has received widespread support from local online video services.

The measures are expected to come into effect in 2017. President Vladimir Putin has ordered that the relevant state agencies develop changes to legislation in order to “ensure equal condition for the operation of online companies in Russia” by September this year, according to a report posted on the presidential website.

Last week saw numerous local online video services protesting that foreign companies selling digital content in Russia, such as Netflix, Google and Apple, have an advantage over domestic companies as they do not pay VAT, which stands at 18% in Russia.

“Our intention is to comply with applicable laws and regulations as our service rolls out globally,” a spokesman for Netflix, which launched in Russia at the start of this year, stated in an interview with The Hollywood Reporter. A spokesperson for Google declined to comment when contacted by The Hollywood Reporter, while Apple could not be reached for comment.

Many local competitors are calling for further restrictions on Netflix's operations in Russia.

Sergei Petrov, deputy general director of CTC Media, whose company runs the online video service videomore.ru, was quoted by local news agency Tatar-Inform yesterday as claiming that Netflix has an advantage over local competitors as, in addition to paying less in tax, it has exclusive rights to many foreign TV series and films.

 

Source: The Hollywood Reporter

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