Some questions about personal income tax
Recently I have answered several questions concerning personal income tax in Russia and now I want to post these answers here for a common use.
All the answers concern the next situation: One person is being send by his company from abroad to work in a subsidiary company in Russia. He expects that he will acquire his work permit in several month. Until then he will be reciting in Russia with a one year visitors visa and during that time he will be receiving his salary in his company abroad. After that date he will be receiving his income in Russia.
And he expects that by the end of 2010 he will have lived in Russia for around 200 days.
The answers and the questions:
1. Will I be considered as a Russian resident for tax purposes or do we count only the period after i have received my work permit?
For tax purposes only periods of a presence in Russia matter. It means that period before receiving a work permit also counts.
2. As I expect to stay in Russia for more than 183 days during the 2010 calendar year, do I have to lodge a preliminary personal income tax return with the tax authorities within one month of my arrival in Russia even if I don not have a work permit yet?
According to the Russian Tax Code we do not have an institution of the preliminary income tax return for the category of taxpayers you belong to. That is way you do not have to lodge it.
3. How should I expect to be charged? Is it correct that I will file a preliminary tax return indicating expected income for the year, and pay tax on this preliminary tax assessment at the rate of 13% as I expect to stay in Russia for more 183 days till the year end? Is it also right that at the year end I have to file a final tax with actual income received and calculate actual tax at rates of 13% on actual income?
Since in Russia we do not have the institution of the preliminary tax returns you do not have to file any of it and pay income taxes on this tax assessment. Despite this you will be charged by the source of income. It means that they have to deduct taxes from your salary and transfer this money to state budgets. I think that your employer (a subsidiary company in Russia) would be this source of the income. This subject in the Russian tax law has a special name, which in English, I think, is “a fiscal agent”.
But before you acquire your work permit you will get income which will be considered as income gained out of Russia and it means that it will not be charged by Russian income tax.
And if the only source of you income is this subsidiary in Russia, you will not be obliged to lodge a final income tax return except a situation you have been overcharged and you want to get a refund.
4. How do I calculate my taxable income? Can I deduct my accommodation cost (rents) which I will be paying myself?
You can not deduct your accommodation cost (rent) as well as a lot of other costs: transport, food, etc.
5. For the months January until April (until today) I have received income and paid tax abroad. Do I include this income on my preliminary and final tax assessments and is tax paid until now abroad set off against tax in Russia?
This income will not affect tax assessments in Russia. And this paid taxes will not set off against income tax in Russia. It is so because at that time you was not a tax resident of the Russian Federation.
6. What deductions am I allowed in calculating taxable income (if any)?
In Russia we have few tax deductions:
- The standard tax deductions (it is like Personal Allowance in the UK) are available for everybody, but they are very limited: about 10 Euro per month until income is under 1000 Euro. Other standard tax deductions concern only specific groups of taxpayers, such as veterans of wars (for example, WWII), disabled people etc.
- The tax deductions on spending on a medical treatment and medicines.
- The tax deductions on buying an apartment or a house.
- Some other tax deductions.
But in Russia we do not have such range of tax deductions for income taxation as some European countries do. For instance, you are not allowed to deduct you accommodation costs and transport costs even if these costs are essential.
If you have any other questions or you need some additional information on the questions above use this way to ask me.
New transfer pricing rules
State Duma has recently passed in a first reading amendments and addenda to the Russian Tax Code concerning new transfer pricing rules. It is expecting that the federal law comprising these new rules will come into effect in the next year.
Current transfer pricing rules which are presented in the articles 20 and 40 of the Tax Code are not working because of some judicial difficulties in their structure. New transfer pricing rules’ authors assert that they took into account foreign countries experience (especially the European Union) in this area and the OECD recommendations concerning transfer pricing.
And now I am going to study this proposed law. If this issue is interesting for you, do not hesitate to ask me any questions.
Double standard
The Western countries (the USA and the European Union) every time accuse Russia of a disproportional use of force in the conflicts in Chechnya and Georgia. But here in Russia we have always known that they use double standard: they can at the same time to accuse Russia of aggression, to bomb independent countries and to kill thousands of innocent people. It is normal for them! This is our knowledge for all times, but time to time we get some pieces of information and different materials (documents, video and audio), which confirm that we have always been right.
The last such confirmation I saw was this:
There I can see only two important things (except murder of the journalists):
- some people were killed (murdered) in the way which can not be named as “proportional use of force” (they were killed from the distance by using a heavy machine gun or cannon);
- some absolutely innocent people who didn’t even have any weapons at all and just wanted to help wounded people were MURDERED (not killed).
As a supporter of a civil society all over the world and as a supporter of an open access to information I would like to share with you this link were the information on this issue is opened (can be obtain).
We don’t need cars with flashers!
Maybe we are witnesses of the birth of a civil society in Russia when people don’t want to be ruled any more without a paying any attention to their wishes and needs. One of the last examples is a new social movement against cars with flashers (Here in Russia a lot of officials and their friends in commercial structures use this kind of equipment. It allows them to break traffic rules. For instance they may drive a wrong side of a road when a right side is blocked by a traffic jam).
This movement was launched last week when one citizen had blocked a car at a wrong side of the road with a President adviser with in it. And now we have a lot of discussions on this topic on Russian branch of the Internet. New videos of blocked cars with flashers appear almost every day. Of course, it doesn’t concern police, fire and ambulance cars.
You can see this first action here:
Personal income tax return
Right now in Russia we have a period of time when personal taxpayers have to file a tax return to their personal income tax. This period will last up to the 30th of April. But this obligation has to do not everyone. This form has to be filed only by people whose income was not withheld by its issue (for instance by employer) and by those people who want to get an income deduction.
This tax return has a special name – “3-ndfl” and its form has been approved by the Ministry of Finance of the Russian Federation.
I filed my tax return to personal income tax last week and have advised a lot of people on the questions of the filing this form and on the questions of the personal income tax as whole. And if you have some questions and problems on these issues you could ask me via my e-mail (you can find it here) or via comments to this post.
NATO supports drug dealers!
Last week there were announced that NATO wouldn’t destroy Afghan poppy fields.
But everyone knows that this is a raw material to produce opium and heroin. Does it mean that the US and the UK want to import these drugs into their countries? Or they want to import this poison into Russia?
Some more information on this piece of news:
Handcuffs in Russia
Have you ever seen in films as cops (policemen) put a one part of handcuffs on a suspects’ wrists and the second part on their own wrists? I’m sure you have. But in Russia investigators and policemen (militiamen) have another way to prevent suspects’ escapes – they put the second part of handcuffs on weight (as you can see on the photo below).
This way of the use of handcuffs is as much effective as heavy weight.
Should The West be scared of Russia?
Today I met a very interesting BBC documentary on YouTube. The most interesting thing of this film is that it contains not only the USA and other Western country’s point of view, but the Russian point of view as well. This film is about the main events of the last two decades and about the Russian attitude towards them. I strongly recommend it to those who wants to understand Russia.
Part 1:
Part 2:
Part 3:
Enjoy the film!
The last decade of the Russian economic
It’s my training text in order to preparation for the BEC Vantage. I think I’ll have here a lot of such texts :
The last decade the Russian economic authorities have been trying to achieve two fundamental and independent goals – macroeconomic stabilization and economic restructuring. After the financial crisis of 1998 and because of the high oil prices which world markets had during the both Putin’s terms Russia had got excellent opportunities to realize the main reforms in economics. But instead of these the government spent budget surplus we had the last seven or eight years on current expenses, on support of different groups of the population and on support of some ineffective brunches of the national industry.
By experts estimate the necessary reforms have not been finished. And now Russia is face to face with new challenge – world financial and economic crisis.
It remained only to wait a new favorable economic situation for new attempt to carry out reforms.
The Constitution Day
The Constitution of the Russian Federation is the supreme law of Russia. It is the source of the legal authority of the government and the foundation of the whole Russian legal system.
This power of the Constitution bases on the people’s will and power. They adopted this document on the referendum which took place on December 12, 1993. That is why we have today a celebration and a reason to discuss this issue.
I’ll try to explain the most of the Constitution basic provisions in the nearest future, but this post is devoted to the people who adopted the Constitution and their attitude to it. Yesterday The Moscow Times published the results of a survey which shows that:
- the share of Russians who believe that the Constitution is relevant and respected has doubled over the past seven years;
- 47 percent of them said the Constitution should be amended only in extremely rare circumstances;
- but only 16 percent of respondents said that they had read the Constitution and knew its contents.
Of course, the last figure is a shame for Russians!