Russia allows those under sanctions not to pay taxes

The State Duma of the Russian Federation has approved on second reading an amendment to the Tax Code on the right of individuals not to be recognized as tax residents of Russia, if they are residents of a foreign country and are under sanctions.

The adopted document proposes that if during a tax period a sanction of a foreign state was in effect against an individual, he may not be recognized in that tax period as a tax resident of Russia, if he has residency in a foreign country. To do this, a citizen will need to file an application with the Federal Tax Service.

The author of the document, Andrei Makarov, said that the amendment is not a way to avoid paying taxes.

"All these people have chiefly been forming their income in Russia over the years. If they recognize themselves as residents of another state, they pay an income tax of not 13% but 30%, that is, an increase in the tax burden, rather than a reduction in it," said Makarov.

He added that the specified amendment would not allow for the concealment of information on foreign-controlled companies, since Russia has signed an agreement on direct information exchange with foreign countries that does not allow it to hide data from other countries.

On March 13 the European Union extended sanctions against Russia for threatening the territorial integrity of Ukraine. The restrictions affect 150 people as well as 37 enterprises and organizations.

  Russia, Sanctions