Russia Threatens ‘Technology Tax’ Against Google, Apple, Facebook

The Associated Press
The Associated Press

German Klimenko, Russian President Vladimir Putin’s “Internet adviser,” is considering a “technology tax” on Internet giants like Google, Apple, and Facebook to create “more equal working conditions” with Russian tech companies.

The Kremlin announced an executive order from Putin on Friday that tasked six federal agencies to work with Klimenko on “amending legislation to ensure equal operating conditions for companies within Russia with respect to the Internet,” as reported by The Washington Times.

“The coalition, which includes Mr. Klimenko, the Federal Anti-Monopoly Service, the Ministry of Economic Development, the Ministry of Finance, the Federal Tax Service, the Ministry of Industry and Trade and the Ministry of Communications, has until Sept. 1 to submit their proposal,” the Times added.

Russian media were soon discussing a “Google tax” or Value-Added Tax (VAT) against foreign tech providers. The Russian legislature has been working on such a tax plan, on the advice of an “Institute for the Development of the Internet,” founded by Klimenko, who owns several Russian Internet companies. Putin personally created the position of Internet adviser for Klimenko, so the signals to international corporations could not be more clear.

Klimenko talked about his technology tax in a Russian radio interview transcribed by the UK Daily Mail: “There should no doubt be equality of Russian and foreign companies before the law. … I’d like to know how much Google earns on the territory of Russia and to add 18 percent to it. I’m really interested in the figure. When we learn it, then we’ll make conclusions.”

The Daily Mail also mentioned Klimenko warning social media companies they would be blocked “sooner or later” in Russia if they do not follow a new law requiring them to store Russian user data on Russian soil, a requirement that will force some of their money into Russian pockets.

Klimenko is eager to let the Internet giants know they are under hostile scrutiny by the Russian government, which is willing to make do without the likes of Google and Facebook because Russian services like the Yandex search engine are ready to take over in their absence.

“What will happen if the government bans Google and Facebook? The answer is stupidly simple: Yandex and the rest will begin to work more, once they receive a bigger slice of the pie,” Klimenko declared in December. “From a purely financial point of view, if Google stops functioning in Russia, Yandex will start earning more.”

Radio Free Europe (RFE) noted that Russia’s Federal Anti-Monopoly Service has already targeted Google, “which ruled in September that the California tech firm had violated a ‘protection of competition’ provision by prioritizing its own services over those offered by Yandex.”

RFE added that Google “has since been ordered to change the way its apps come preinstalled on Android smart phones, or risk paying upwards of 15 percent of its local revenue to Russian authorities.”

A profile of Klimenko at Meduza noted that he is a military veteran with strong loyalty to the Kremlin and believes the Internet is severely under-regulated, hostile to market competition, and very interested in securing greater “cooperation” from social media companies. In other words, he expects them to help the Russian government spy on their users and censor their content. It is a safe bet that protectionist tariffs will not be the last demand he places on Internet companies looking to do business in Russia.


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