On taxation of electronic services from 2017

Dear Ladies and Gentlemen,

The law “On Amendments to Parts I and II of the Tax Code of the Russian Federation” comes into force on January 01, 2017. Pursuant to the adopted changes, starting from 2017 foreign companies which do not have permanentestablishment in Russia and provide electornic services to individuals inRussia will be required to register with the Russian tax authorities and pay VAT in Russia.

1. What services are called electronic?

Pursuant to the text of the Law, rendering services in an electronic form means providing automated services through the information and telecommunications network (including the Internet). More details>>>

2. What are the rules of taxation in an electronic form?

Electronic services are subject to VAT in case of their provision in the territory of the Russian Federation. More details>>>

3. Other issues, related to payment of VAT

Whenrendering electronic services in the territory of the Russian Federation,a foreign company must register and pay the Russian VAT unless a tax agentwithholds VAT. The tax rate is counted at the rate of 15,25% applied tothe cost of the services, including VAT. More details>>>

Therefore, within 30 calendar days from January 01, 2017, a foreign company, providing electronic services to individuals in Russia, must register with the tax accounting.

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We hope that you find the information above helpful. Should you have any questions, please, contact directly Head of ALRUD Taxpractice, Senior Partner Maxim Alekseyev via e-mail: [email protected] or Head of ALRUD Commercial practice, Partner Maria Ostashenko via e-mail: [email protected].

Yours faithfully,

ALRUD Law Firm

Note: All information was obtained from publicly available sources. The author of this information letter assumes no liability for the consequences of decision-making based on such information.