Google under scrutiny by Russian authorities for tax evasion and illegitimate data transfers
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, a senator heading 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 ad service enabling website owners to make money by running Google ads.
The senator claimed that Google has been breaking Russian law “for years,” as user agreements between Russian websites and the US company make the Russians solely responsible for paying Russian taxes upon receiving payment from Google.
Russian tax legislation requires, however, that Google 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, Gattarov explained.
The 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,” said to East-West Digital News Sergey Erofeev, the commercial director of Regitratura.ru, a major player on the Russian online advertising market.
“But we believe that Google leads its activities in Russia in full accordance with Russian laws, at least formally,” Erofeev added.
The impact of Snowden’s relevations
The same Senate committee has created a working group to investigate international data transfer by Western sites following Edward Snowden’s revelations of the PRISM program. Senator Ruslan Gattarov heads this committee, which invited representatives of Internet companies, especially Google, to cooperate with the group’s proceedings.
Google did not initially cooperate, but now the company’s vice-president of the region of Southern and Eastern Europe, Middle East, and Africa, Carlo d’Azaro Biondo, has requested a meeting with the committee and offered to cooperate, according to Senator Gattarov.
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.
As of July 26, Google Russia’s press service had not answered EWDN’s request for comments.