Hello everyone,
Russian site habrahabr.ru posted an interesting information. Wargaming’s competitor on Russian market, company Mail.Ru (the creator of an atrocious browser-based WoT clone called Ground War: Tanks) was involved in a Arbitration Court of Moscow decision number А40-91072/14-90-176 (“Mail.Ru Games versus IFNS No.14″). The verdict was announced on 24.11.2014.
IFNS stands for Federal Tax Service Inspection – you know, Russian IRS. In early 2014, IFNS made a thorough audit of the abovementioned company, as a result of which it was found out that in the second quarter of 2013, Mail.Ru made cca 1,6 billion rubles (cca 26 million Euro) from “implementing additional game functionals”, in other words, for selling premium accounts, tanks and such.
IFNS decided to tax this revenue with VAT (18 percent) and ordered Mail.Ru to pay cca 292 million rubles as VAT backpayment (and possibly 58 million more as a fine for tax evasion). Mail.Ru was not trying to evade taxes, because according to Russian law these payments are exempted from VAT, but IFNS did it anyway.
In other words, IFNS considers the sale of virtual items (and this already concerns WoT, I am sure you see how) subjected to VAT.
Mail.Ru of course did not want to pay anything, so they put it up for a court to decide. And, surprisingly enough, the court sided with IFNS. I do not know whether Mail.Ru appealed (or whether that’s even possible), but the point is, it’s completely possible that other game developers (including Wargaming) will be soon subjected to “random inspections” and with a court decision in their hands, IFNS will demand more taxes (Russia needs money after all, I don’t have to tell you why). My first reaction to this was “well, that explains a lot”.
Conclusion
It’s clear that in the end, it will be the players, who pay the bill. But the real question is – WHICH players? Russian ones already saw the prices on their server soar with the plummet of the ruble (since the prices are tied to USD), so I think that as a “global” company, Wargaming might transfer those costs to regions with richer players. In other words, us. So, keep an eye out for price increases.
Only bad news today ^^’
1: mission for gold nerfed.
2: no more gold compensation for players who already have a tank
3: possible cost increase for gold
(4: SU-76i fail. So much rage. -_- )
and WG wants 2 millions likes on VK. LOOOOOOL
^This!! Well, it won’t affect me much, because I quit giving them money long time ago…
Ha, I feel cheap playing without premium :D .. not.
[still I will spend some ¬30 euros /year on my most played game]
same here…
“and WG wants 2 millions likes on VK. LOOOOOOL”
This. So much this.
you butthurt over a tier 3 tank that you’ll never see unless you’re playing tier 2-4? which isn’t exactly that op btw i own it $7 not bad.
(I am a pure collector and wished to get this little TD really hard)
Putin needs premium ammunition and fresh camo for his Army.
Jokes aside,
It’s a cash grab made by Russian government. Law states that these transactions are exempted from taxation but now suddenly a tax office makes an audit and decides that Mail.ru must pay tax AND this happens just when the russian economy plummets and federal budget might collapse from sanctions.
Damn, things must be really ugly in snowland.
Not only in russia, in EU you need to pay tax on digital goods as well. I assumed that the gold prices alreaddy was taxed with EU VAT.
-
It is already taxed in the UK for sure as on the purchasing portal it says the price and underneath in tiny writing incl. VAT.
They will put type59 in some bundle on sale and will get a lot of money to cover backpayment ;)
Nah, it will be the KV-220, the unique one time only offer that appeared only 3 times or so, probably bundled in some special package for 100 euro.
I own the KV-220. There’s nothing stellar at all about this tank. The KV-1 is head and shoulders more enjoyable to play.
Then you have no idea what you are doing with your KV-220. Simple as.
Didn’t mean to hurt your feelings. Didn’t say that it’s a bad tank. Just said I enjoyed the KV-1 much better.
I have KV-220 myself, and it’s a great tank in tier 5 battles and even though its penetration is somewhat lacking against some 6 tiers, I would say it’s easy and fun to play.
If we talk seriously, I think Type 59 sale is only a “When?” question, not an “If?”
If things will go further as they do now, it will be unavoidable
I can only presume that at some stage they may try to sell the EU Pre-orders – again the ones that were only ever going to be available before the beta finished (in that progress was not going to be reset from that point on).
A number of months afterwards the three pre-orders all appeared in the gift shop. There was a fair amount of unhappy players and the three tanks were removed after 24 hours…..
The EU will probably copy this, although it will take them a few more years to catch on.
WG already collect VAT for the EU.
That is rather odd, given that there is not currently VAT on virtual goods in the EU.
You don’t pay on the single item transaction. You DO however pay it when buying the “gold”, just like you’d pay VAT on a monthly subscription on other games.
I wonder IF they do increase the prices on US/EU/SEA servers.. would that be only for the premium shop, or would ingame store premium tanks somehow get their gold price increased too -.-
I hope neither of course..
Btw: (Russia needs money after all, I don’t have to tell you why)
To me, it’s nasty that a country wants to profit from a game company just so they can fuel their army -.-
First! Turn your brain on! Which army dude? We aren’t in military conflict. We are blocked by others.
Second, its nothing strange that gov wants more profit, dont make it look like we are cunts, bastards, global evil and etc. everyone wanna make more money go check about taxes for other gamimg devs in USA/EU
It pisses me off to see brainwashed person here
UPD:
And yeah, i wanna see your reaction, when anything in game will cost 50+ more % than usually, prices rise while folks income on same lvl as it was
Whose fault is that the ruble has depreciated so much? Wargaming’s? Someone else besides the Russian government?
I’m surprised to see many ppl still believe that US government is good and who defy them are evil…
Back to the topic, I don’t think they will increase their gold price, but instead increase the premium tanks price, or the time they force users to buy newly-released prem tanks through gift shop.
Let’s just hope they will not mess with the core elements of the game, and make it a pure p2w model.
What you say is mostly correct, however the problem is that in Russia, there is not the same clear division between the judiciary and the government as in many other countries, so it’s easy to see this ‘legal’ decision as a political one.
Oh, also you are cunts, bastards, global evil and etc. Source: History & Current events ;)
PERSIvAlN, Putin said that armed GREEN MAN in Crimea were NOT Russian army solders. However later, 76th Paratrooper division from Pskov, Russia (¬2000km from Crimea) got medals for “successful operation” in Crimea. WHO was lying to millions?
Ye, trust everything Putin says and RT TV with their crazy fantasies :D
Last “flash news from Russia TV”: Ukraine is banning Died Moroz[Дед Мороз] and will use American Santa Claus :D
and now they’re starting german RT, i wonder how many Germans will believe to this propaganda bulls.it
It’s extremely effective propaganda. You have no idea the length of morons who believe everything has an agenda other than the flavour of the week conspiracy touted on RT. Everything is a conspiracy and there is a Zionist/US/EU/Anglo-Saxon/ISIS at fault for everything.
Just read the comments about the various articles whitewashing the current problems with the rouble/oil prices. Comedy gold.
Do u realise, that noone will announce such info about medals/rewards, that it is “black-ops”? Doing such things is like wearing t-shirt with “shut me down, i’m officer” in combat.
I trust to my friend that migrated from Ukraine.
U can go listen more bull-sh!t from propaganda, but try to think about:
-who game money etc for this year revolution in Ukraine?
“Second, its nothing strange that gov wants more profit”
Except that the higher the taxes, the lower the income/profit for a government.
Why? Well, look at Russia’s economical practices. Try to figure out why there aren’t many companies there and why they would prefer to conduct their businesses elsewhere.
Simple: because RU government shafts them over with unpredictable fiscality & over-taxation. Just like any shit-tiered “socialist” (read: cvasi-communist) country
The game might be developed in Russia, but their head office is in Greece. Russian servers might have to pay VAT. Fortunately us on EU servers are not governed by Russian laws.
That said however the russian market is under pressure already so WG might decide to share the burden over their other areas over time… After all the US and EU capitalists are the reason for this in the first place denying russians their natural right to coup a country.
Cyprus, not Greece. Also, SS did not say that WG would directly pass the cost of the VAT on to their customers. Rather they will do it indirectly, by price hikes etc, probably for all customers, rather than just Russian ones. Therefore, EU customers will likely end up paying for this.
Also it’s hardly relevant as in most countries (that’s almost 100% worldwide, with few exceptions) if you want to have business in a certain country you have to pay taxes from income obtained from that country.
So if I my company is based say, in the US, and I want to sell something in, say, Germany, I will have to pay Germany’s sale taxes.
Solution is really simple. Just move the company to a country that has more reasonable tax laws.
Russia alreaddy has good tax laws, trying to make a business in scandianvian countries and then come back. VAT is 30% in sweden.
Russians have nothing to do with game developement. One game server is in Russia – thats all. Game is being developed by people from Belarus. With head office moved to Cyprus. Get your facts straight will you?
EDIT: from wiki: “The company has development centers in Belarus, Ukraine, United States and Russia. There are also Wargaming.net offices in Cyprus, France, Germany, South Korea, Singapore and Australia.” …well, apparently im wrong somewhere myself.
Generally a company pays tax based on it’s domicile. There are lots of international treaties, and decided cases by the International Court of Justice (a Principal Organ of the UN) about cross border taxation of multi-national companies.
Although WG is a company set up in Belaruss, as it has become more successful it has moved it’s corporate identity to Cyprus. Therefore WG has always been the subject of VAT as per the EU treaties as Cyprus is an EU member.
It seems to follow therefore that WG will actually be better off by this ruling, since Mail.Ru was able to undercut WG in one of it’s key markets (Russia) via tax avoidance. By the ruling Mail.Ru will have to put up it’s prices, which (assuming WG has already been paying taxes) will make it less competetive against WG.
I assume WG in Cyprus is fully audited, and pays Cypriot taxes.
“I assume WG in Cyprus is fully audited, and pays Cypriot taxes.”
On the other hand, it does not publish its revenues anymore (which is contrary to Cypriot law) and it does not seem to be a problem. For context: several months ago there was an interview with Viktor Kislyi, who openly stated that when it comes to law and taxes, he meets with Cypriot finance minister directly.
*shrugs*
I used to work in the tax avoidance business and had a number of Russian/ Belorussian clients. The more upstanding of them would not touch Cyprus as a jurisdiction, due to its reputation as a harbour for laundered Russian crime proceeds.
On the other hand, a lot of Czech firms moved there (years ago, until the company law changed, it was a pure tax haven). Can’t say I blame them, seeing what the taxes here get spent for.
I’ve just checked and it seems that the EU will be charging VAT on virtual goods from 01/01/15, so yes, this is probably good news for WG, but bad news for consumers.
Wanna bet that the price increase will “include” the Russian one? :)
Well it seems that we have all been getting our internet tanks VAT free (don’t know about US) until now, so we are theoretically all in the same boat, but you can bet that any price rises will disproportionately effect ‘fascist’ Europeans.
Actually, is that so? Because I swear that (Czech in this case) community managers, when asked how come the Russians pay less, argued with VAT…
By default, I would assume that WG community managers are talking out of their arses (i.e whatever excuse pops into their heads will do).
See http://www.paymentscardsandmobile.com/blog/new-rules-digital-vat-affect-merchants/
Have not read it all so there could be more fine detail, but it does seem as if EU has been VAT free on virtuals until now. It’s possible that CzechRep had it’s own unilateral tax, but I know there is currently no such tax in UK or France, for example.
Although (without looking) I could swear War Thunder has its purchases stated as inc. VAT when I buy in Euros or Rubles (depending on how the server is feeling at that moment in time).
Not entirely sure putting VAT on would lead to an increase in Russian prices, as that’s their biggest market, and seems to be particularly price sensitive – perhaps they’ll maintain the pricing as is, and seek to recoup lost profit by price increases on EU?
Although, that would be a particularly stronk tektik, as EU already has highest prices, and is probably more susceptible to subscriber churn/loss.
VAT on e-commerce is a very complex area, and in part depends on the regulations in each member state. My brief reading of Cypriot regulations leads me to suspect that there is a threshold, and that above that threshold a company has to pay e-commerce VAT. WG would be way above that.
Also there is a very complex area called “reverse charge mechanism”, so that WG can reclaim VAT paid elsewhere against VAT claimed by Cyprus. So for example if they pay it in the Czech Republic (and they probably do) they can reclaim it against “outputs” in Cyprus.
I checked and WG are audited by Deloittes who are one of the big four accounting firms in the world. All the big four will ensure good accounting practice, however they will also provide highly expert advice about how to minimise a corporate tax liability operating within international law. Deloittes (like the other 3) do not come cheap, but the expertise and experience they bring to bare can often mean that Deloittes can put more staff hours into pushing a rule as far as it can be pushed without actually breaking it, than many small states. So Deloitte worldwide has about 200,000 staff, which I guess is more than the combined state tax offices of Cyprus and Czech Republic.
I therefore assume that for tax WG is completely legal and paid up, but they have received the very best advice to minimise that legal amount, and Deloittes will have made a profit out of WG’s business.
All correct, except that there is currently no VAT on virtual goods. I am assuming that the sale of gold counts as a virtual good. This is changing in 2015, and the rules are also changing to force taxation at the rate which applies in the country where the goods are supplied.
Agree with the e-commerce thing, which was principally aimed at stuff like Amazon and itunes, but the provision of e-services has been subject to VAT in Cyprus for some time. So there are technical differences between the provision of “goods” and “services” and how they are taxed.
Cyprus has a rules about tax on “services” supplied to businesses, and to individuals in EU and non-EU states. So for example if WG has a subisduary in another EU state, and the subsiduary delivers the game ie Czech Republic (population 10 million) , that may come under one set of rules, but if WG from Cyprus delivers the game to the customers in a smaller EU state directly say Solvenia (population 2 million), then a different set of Cyprus VAT rules apply.
I would have thought that most of the game is a “service” e-delivery, and not a “goods” e-delivery.
Type 59 special sale is coming. :D
WRONG
Mail.RU = tomato accountants = Lost case
WG = purple accountants = case is a win for WG
No Type for you Garry
lol.
you are wrong..mail.ru is bigger than WG..
http://en.wikipedia.org/wiki/Mail.Ru
and Silentstalker..you are also wrong..Ground War Tanks is not bad..
Pardon me for being a economy/finances noob, but isn’t VAT on virtual trade basically a form of double taxation? Since the company is already taxed on the profit it makes from these transactions, which are directly between it and its customers, with no government 3rd party involved?
Then we in sweden will get the highest gold prices after 1st january because we have fucking 25% VAT, the highest in europe/world.
The VAT isn’t part of the profit in the first place
@Fedaykin – when you purchase a physical item, (a shovel say) the cost of that item includes VAT. So the manufacturer of the shovel pays the VAT to the government, then he deducts the cost of the wood to make the handle, the metal to make the blade, and the staff wages to put it together, and after all that he hopefully makes a profit, he then pays tax on the profit before he receives that profit (highly simplified version). So most items you buy whether an e-service or a physical item have different elements of tax involved in the transaction. Thats not even getting into VAT being reclaimed between B2B transactions.
Well, that explains their greed lately. I still don’t feel sorry for them. They can rot in hell.
Nerf the december mission, no gold compensation for the tank and higher price forma the gold…
And you WG are you asking for 2 millions likes on VK…relly, fuck you!
Prices in NA and EU shops already are about 25% higher than in RU shop. For example 30 days of premium cost:
RU: 9,99USD
NA: 12,69USD
EU: 9,95EU (roughly 12,34USD)
You do the math.
If only it would be that simple. RU player have to work longer for his 30 day premium compared to US and most EU countries. Reason why some things are cheaper in countries with weaker currency is because they get paid less when you exchange it to USD or euro. This way those people can enjoy virtual goods without spending their monthly paycheck for a video game.
bad news, we all know politicians and their idiotic mindset of punishing normal people just because they are angry at someone….. this applies to both sides…. dont pretend to be an angels
just sad about comment section…… stop mixing politics here pls….
I think that it is likely that they try to cover the cost through other servers which are well established and with comparatively wealthy players. I.E. the EU server, as if getting 10% less for your money than any other server on your gold isn’t already bad enough.
I see a chance that KV-220 will be in shop again ;)
You buy something, you pay fucking taxes on it. It’s not so hard to understand. If you want your hobby treated seriously, that affects all aspects of it.
Can you give one reason why it should be tax exempt?