The Russian Ministry of Finance proposes to make several adjustments to the individual income tax, according to the appendix to the Main Directions of the Budgetary, Tax and Customs Tariff Policy for 2022 and the planning period of 2023 and 2024. Click here for full notice of the changes.

It is planning to oblige Russian companies to pay personal income tax on behalf of foreign employees working overseas. In addition, it is planned to expand the number of applicants for standard and social tax deductions, and to oblige the DIA to provide the Federal Tax Service information on the interest paid on deposits in the event of a bank liquidation, and to the Pension Fund of Russia – on the owners of the capital.

Russian nationals based overseas

The Ministry of Finance plans to increase the tax burden on some groups of individual employees. One of these proposals concerns overseas employees of Russian businesses.

This means that foreign tax residents (people who spend less than 183 days a year in Russia) working remotely for a Russian company may be required to pay personal income tax in Russia, with the Russian employer responsible for tax deductions. According to the current legislation, they are not required do this. The situation therefore requires Russians based overseas – and their employers – to investigate Russia’s respective Double Tax Treaty documents, which cater for the provision of double taxes in two jurisdictions and alleviate the problem. Nevertheless, it creates an additional tax administration issue for both. See Russia’s Double Tax Treaty Agreements here.

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