Russians may be exempt from personal income tax on debts forgiven by foreigners

The government proposed not to levy personal income tax from Russian citizens on the income that appeared when buying shares or shares in Russian companies from non-residents who forgive the resulting debt to the buyer. Amendments, the text of which is in disposal RBCwere introduced by the Cabinet of Ministers in the adopted in the first reading bill.

Taxes will not apply to income “in the form of amounts of obligations terminated in 2023 under a contract for the sale of shares (stakes in the authorized capital) of Russian organizations concluded after March 1, 2022, owned by the seller as of March 1, 2022 – foreign organization (or foreign citizen)”, if a decision was made to forgive the debt, follows from the text of the initiative.

It also follows from the document that the tax will be exempted if the non-resident transferred the debt by the end of this year with the help of an agreement on the assignment of claims to another foreign organization, which subsequently forgave the obligation. It is specified that the amendments were approved by the Cabinet of Ministers Commission on legislative activity on July 10, this is also confirmed in the TASS government.

On February 21, Russian President Vladimir Putin during his address to the Federal Assembly declaredthat the government will have to prepare additional measures to deoffshorize the economy. In June, the Economy Ministry unveiled a plan offering tax breaks, easier relocation, shareholder protection, and more.

At the same time, the adjustment of business benefits was announced back in the fall of 2022. At that time, Deputy Finance Minister Alexei Sazanov told Vedomosti that the Ministry of Finance plans to submit proposals to the Cabinet of Ministers on improving investment tax incentives for businesses starting in 2023. He noted that as part of the adjustment, the abolition of any tax incentives was not considered.