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Russian lawmaker suspects Google Inc of years-long tax evasion

July 18, 2013, 12:19 UTC+3

Ruslan Gattarov on Thursday filed a request to the Russian Federal Tax Service to audit the company’s financial activities regarding Google AdSense

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MOSCOW, July 18 (Itar-Tass) - A Russian lawmaker has suspected Google Inc. in years-long tax evasion. Ruslan Gattarov, the chairman of the Federation Council’s (upper parliament house) information society commission, on Thursday issued a request to head of the Russian Federal Tax Service Mikhail Mishustin to audit the company’s financial activities in what concerns its paid electronic service Google AdSense.

In his request, the text of which is available to Itar-Tass, the lawmaker notes that this context advertising service in use since 2003 “makes it possible for website owners to derive profits from placing advertising on their sites.” Despite the fact that Google has an official representative office in Russia, all related financial transactions are executive between Google Inc. or Google Ireland and a private individual in Russia.

According to Gattarov, the user agreement is regulated by English law, which is allowed by Russia’s Civil Code (article 1210, part 3). “But this provision is only applicable to the regulation of civil matters, but not tax relations,” he stressed. “Nonetheless, in section 6 of its user agreement, Google Inc. relieves itself of responsibility for payment of taxes to the Russian budget and places such responsibility on the beneficiaries in Russia,” which, according to the lawmaker, runs counter to Russian laws.

The lawmaker stressed that the transnational company is obliged to observe Russia’s tax laws regardless of the legal form and the matter of its user agreement. “However, judging from the agreement, it does not fulfill its liabilities or does it improperly,” he said. “Thus, if the above facts are proved true, Google Inc. should be found guilty of violating Russian laws in what concerns withholding of personal income taxes by tax agents, which is punishable by a fine of 20 percent of the sum of taxes paid (article 123 of the Russian Tax Code).”

In this connection, Gattarov asks the head of the Russian Federal Tax Service to scrutinize the legal mechanism used in the Google AdSense user agreement between Google Inc. and website owners. Apart from that, he requests to audit Google’s Russian office and to request the head office to provide information about money transfers to Russian citizens over the period of the service operation and about the payment of personal income taxes.

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