The Ministry of Finance explained the refusal of a 30% personal income tax for those who left with fears of increasing the outflow of personnel

The Ministry of Finance has proposed using base personal income tax rates of 13-15% for remote employees after they lose their tax residency in the Russian Federation due to fears of a labor overflow. Previously reportedthat freelancers working for Russian companies from abroad with “using the Russian segment of the Internet” after six months of living abroad, may be subject to personal income tax at a rate of 30%. Then in the Ministry of Finance explainedthat the amendments to the Tax Code will not affect employees of foreign affiliates of companies from Russia.

“If we introduce a 30 percent rate, these enterprises that employ individuals can create branches abroad and employ individuals there. Accordingly, we will lose not only personal income tax, but also insurance premiums. Therefore, in order to avoid such an overflow of labor, we proposed a single rate for both residents and non-residents,” Deputy Finance Minister Alexei Sazanov told reporters (quoted by Interfax). The task is not to maximize revenues from such citizens, but to preserve the revenue base of regional budgets, the Ministry of Finance said earlier.

While a citizen remains a tax resident of the Russian Federation, he pays 13-15% to the Russian budget from the income received, if he ceased to be such, his income is subject to taxation in accordance with the legislation of the country of which he became a tax resident. If the employment contract of a full-time employee and the company does not mention work abroad, then the general rules apply: the employer first withholds 13-15% of personal income tax from the employee’s income, after he loses Russian tax residency – 30%. Freelancers are exempted from paying personal income tax to the Russian treasury after they lose their tax residency in the Russian Federation.

Read more in the publication “Kommersant” “Individual income tax after”.

Maria Fedotova