Regulation Roundup

Digital Taxes, Big Tech In Regulatory Focus As 2020 Dawns

Big Tech Digital Tax

As 2020 dawns, regulators are continuing to focus on taxes and possible anti-competitive behavior on the part of tech’s marquee names.

Russian regulators are seemingly taking aim at larger U.S. tech firms, placing laws on the books that would restrict content offered by those companies.

As reported last week, hardware spanning computers and mobile devices sold in Russia will be required to have Russian software pre-installed beginning July 1, according to The Hollywood Reporter.

That mandate would impact firms such as Apple and Samsung, among others. The Russian regulation means that tech giants would have to pre-install the Yandex web browser and other apps. In terms of financial impact, as noted by the Reporter, the companies would have to pay additional fees tied to licensing and development.

A number of tech firms, including Google, Samsung, Dell and Apple, have joined the Association of Trading Companies and Manufacturers of Household Electrical Equipment and Computers (known under the acronym RATEK) in petitioning authorities for those requirements to be dropped.

“The initiative is potentially harmful to the market,” a spokesman said, as quoted in the Reporter. “It will hit consumers, electronics manufacturers and software developers alike. Specifically, manufacturers will suffer as operational systems of some of them are not suitable for external applications, and even those who potentially can pre-install local apps will have to pay sizable license fees.”

Elsewhere within Russia, and related to tech oversight, the country’s Federal Antimonopoly Service late last year opened a probe into Booking.com, a hospitality and reservation site, focusing on anti-competitive issues.

The regulator, according to reports, is looking into whether hotels and hostels had been asked to list the same prices on reservation sites other than its own. If the company is indeed found to have engaged in anti-competitive behavior, it could be fined as much as 1 percent to 15 percent of revenues generated in the country.

Taxes

One continuing theme that will play out into the new year (and well beyond): taxes. Specifically, regulators and legislators have been levying taxes on companies that derive top line contributions from doing business in various countries.

In one example, in Malaysia, Google must charge a 6 percent service tax on all apps and in-app purchases in the country. The tax took effect at the beginning of this year.

Separately, Italy said it will tax Big Tech companies, following a move by France. As noted, Italy’s tax equates to a 3 percent charge on digital revenues for companies that get at least 750 million euros in global sales, with at least 5.5 million euros of that tally derived from Italy.

Across the Pond

And coming into a new week, in the United Kingdom, U.K. Finance, the trade body representing banking and finance firms, has offered up a response to the U.K. government’s investigation into industry regulations. The document from U.K. Finance said the government needs a clearer strategy and set of policies for financial regulation.

The organization said the complexity of regulation has resulted “in multiple U.K. public-sector bodies regulating banking and finance firms, sometimes for quite different purposes, sometimes in ways that can — and frequently do — overlap and conflict.”

A number of companies queried by U.K. Finance reported that significant percentages of their IT budgets were devoted to satisfying regulatory mandates and changes.

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