Russian Finance Ministry explains why it scrapped planned tax hike for workers abroad
Implementing the proposed measure would have undercut the budget, a senior official assessed
Russia’s Finance Ministry concluded that a proposed hike of the personal income tax for those working remotely from other countries would not have helped the national budget, a senior official has said, explaining why the idea was abandoned.
The ministry considered increasing the tax rate for employees of Russian businesses who are residing in a foreign jurisdiction from the current 13-15% to 30%. In April, it introduced draft legislation in the State Duma, Russia’s parliament, to enact the change but swiftly recalled it. Last month, it announced that the current system – under which residency status is irrelevant for the personal income tax – would be kept in place.
“If we introduced the 30% rate, businesses employing such people could create subsidiaries in other nations, and we would have lost both the personal income taxes and the [employer-covered] insurance contributions,” Deputy Finance Minister Aleksey Sazanov explained to journalists on the sidelines of the St. Petersburg International Economic Forum on Wednesday.
READ MORE: Russia reverses tax-hike plan for workers abroad
Russian businesses normally handle all payroll taxes for their wage-earning employees. The insurance contributions fund the national pension and healthcare systems and certain social benefits, such as paid maternity leave.
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June 14, 2023 at 11:14PM
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