Prices for iTunes Match and Google Play Music have gone up in Russia as foreign online companies operating here now have to pay "the Google tax" – the value added tax (VAT), which they were previously exempt from.
Apple has raised the price of an annual subscription for iTunes Match by 16%. Monthly subscription fees for Apple Music have remained unchanged for now.
Google has informed users that due to the changes in the Russian legislation, the value added that an 18 percent VAT will now be added to the price of all subscriptions, including that of Google Play Music.
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"Google observes the tax legislation in all countries where it operates," a spokesperson for Google in Russia told Billboard. Apple's Russian office did not respond to Billboard's request for comment.
The VAT for foreign online companies operating in Russia was introduced last year, effective Jan. 1, 2017. It is to be paid on a quarterly basis and this month, companies will have to pay it for the first time for the period between Jan.–March.
In addition to Google and Apple, the tax will also apply to Netflix, Microsoft and Facebook.
In 2008, an exemption from VAT was adopted in Russia for foreign software developers. It was subsequently applied to software sales on Apple's AppStore and Google Play and later to sales of music and films on iTunes, Google Play Music and Netflix.
In early 2016, however, local online video services and music streaming companies complained that the exemption of their foreign competitors from paying VAT led to "unequal market conditions.”
The Russian legislators immediately jumped on the idea of introducing VAT for foreign online companies, which was dubbed "the Google tax." The government estimates it will take in an extra 10 billion rubles ($174 million) a year from the added tax.
