Russian Authorities To Investigate Google’s Tax Practices

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A Russian lawmaker accuses Google of tax avoidance, while a different investigation looks at data transfers possibly related to PRISM

A prominent Russian legislator has censured Google for shifting its Russian tax burden to local contractors – just weeks after Google and other US Internet companies were accused of avoiding taxes in countries like France, Italy, and the UK.

Ruslan Gattarov, head of the committee for information policy of the Council of the Federation – the upper house of the Russian Parliament – openly rebuked the Internet giant last week for manipulations involving Google AdSense, a paid contextual advertising service which enables website owners to make money by running Google ads.

The politician claimed that Google has been breaking Russian law “for years,” as user agreements between Russian websites and the US company make the locals solely responsible for Russian taxes upon receiving payments from Google.

Shifting responsibility

According to Gattarov, Russian tax legislation requires Google to deduct the amount of tax from any payment to a Russian contractor and pay the tax on its own, without shifting the burden to its clients.

google-doodle-st-basils-cathedral-120711The lawmaker is seeking assistance from Russia’s Federal Tax Service to examine Google’s activity in Russia.

“How Google manages tax payments for AdSense depends partly on the legal status of many individual site publishers, which might imply complexities in an international context,” Sergey Erofeev, the commercial director of, a major player on the Russian online advertising market, told East-West Digital News.

“But we believe that Google leads its activities in Russia in full accordance with Russian laws, at least formally,” he added. 

The same state committee has created a working group to investigate international data transfers by Western companies following Edward Snowden’s revelations of the PRISM programme. Senator Gattarov heads this committee, which invited representatives of Internet companies, including Google, to cooperate with the proceedings.

According to Gattarov, Google did not initially respond to the invitation, but now the company’s vice-president for EMEA, Carlo d’Azaro Biondo, has requested a meeting with the committee and offered to cooperate.

At the meeting, which was scheduled to take place on Thursday, Google representatives hoped to discuss the company’s projects in Russia and “to remove a possible misunderstanding of the situation on both sides,” according to a letter addressed to Mr. Gattarov and provided to RIA Novosti.

This article originally appeared on East-West Digital News.

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