The Cabinet of Ministers withdrew the draft on the rules for the payment of personal income tax for workers from abroad

The government decided to withdraw from the State Duma a bill on clarifying the rules for paying personal income tax for workers from abroad, a representative of the Cabinet said. A proposal for a new regulation was presented to Parliament the day before, on 24 April.

According to the amendments to the Tax Code, which were developed by the Ministry of Finance, it was planned to expand the concept of income from sources in the Russian Federation. In particular, it was proposed to consider activities in the Russian segment of the Internet as such income. “It is necessary to make a number of technical clarifications to the bill before it is sent to the State Duma,” a government spokesman said. According to two Vedomosti sources, the initiative is not rejected – the document will be finalized and re-introduced. In particular, one of the interlocutors says, it is planned to clarify the wording regarding the taxation of income received through activities on foreign sites, such as YouTube, Instagram (part of Meta, which is recognized as an extremist organization and banned in the Russian Federation), TikTok and so on. In the current edition, this idea was formulated too vaguely.

According to the bill, it was assumed that if Russian domains, network addresses or servers are used in the performance of work, then income from such activities will be subject to income tax in Russia (counted from the source of the Russian Federation) if at least one of three conditions is met. In particular, if the individual was a tax resident of Russia (i.e., the performer was in the country for more than half a year), or if the income was received on an account in a Russian bank, or the source of payment (customer) is a Russian organization or individual entrepreneur.

A few hours after the bill was submitted to the State Duma, the Ministry of Finance issued a press release specifically explaining that tax amendments providing for the application of a 30% personal income tax rate for remote work in the Russian segment of the Internet would not affect employees who work under labor contracts. For them, the current tax conditions do not change in any way. The bill is still being finalized on the platform of the government, the Ministry of Finance warned at the time.

Now, if, for example, a web designer, a non-resident of Russia, fulfills an order for a Russian company from abroad, he does not pay tax, since this income is not considered received from activities in the Russian Federation, Sergey, head of the tax practice of the EPAM law office, told Vedomosti Kalinin. In his opinion, it was planned to close this gap in the legislation – the Russian segment of the Internet in terms of income received is planned to be equated with the territory of Russia, he specified.

The personal income tax rate for residents of the Russian Federation is 13% or 15% on incomes over 5 million rubles. in year. Non-residents, that is, citizens who stay outside of Russia for more than six months during the year, pay income tax in the amount of 30% from sources in our country.

Judging by the text of the bill, if a non-Russian segment of the Internet, i.e., for example, YouTube or Instagram, was used to perform the work, then such income is not subject to taxation, even if the funds were received, for example, for showing advertising from a Russian company, drew attention Kalinin.

The source of Vedomosti assured that this “loophole” will also be closed – bloggers working abroad and posting content on foreign sites, but receiving remuneration from Russia, will also fall under Russian tax legislation and personal income tax will be withheld from their income. Another interlocutor close to the government confirmed that such an approach would be implemented. According to him, this principle is already envisaged by the current version of the bill, but it is planned to correct it and formulate this provision more clearly.

The Association of Bloggers and Agencies (ABA) supported the initiative of the Ministry of Finance. The law looks logical and expected, said the representative of the association. According to him, if a blogger receives income from Russia, then taxes should go to Russia. Now there really are loopholes that some bloggers who have ceased to be tax residents are actively using, he admitted. For example, a blogger is a non-resident of Russia, but receives income to a Russian account from a Russian company and does not legalize his income in the country where he is a tax resident, he gave an example.

The bill itself is aimed at reducing the outflow of funds from Russia. And this measure does not seem to be some kind of “draconian”, the representative of the Association emphasized. If a blogger, for example, is a US citizen, then he is obliged to pay taxes to the American budget, regardless of where the income was received, the source recalled. This applies not only to earnings, but also to the sale of real estate, shares, gifts and inheritance.

True, it is not yet entirely clear how the Federal Tax Service will monitor whether a blogger has legalized income in another country, the ABA representative asked.