Russian Federation

Individual - Significant developments

Last reviewed - 16 January 2020

Russia intends to change or even terminate the DTT with some countries if they do not agree to increase the rates on dividends and interest.

Tax on professional income

As of 1 January 2019, a new experimental tax regime was introduced in four regions of Russia: Moscow, Moscow region, Kaluga region, and Republic of Tatarstan. Subject to certain conditions, individuals and individual entrepreneurs may switch to this special tax regime and pay tax on professional income from some independent services at rate of 4% or 6%, irrespective of their tax residence status in Russia. Since 1 January 2020, this new regime has been spread throughout 19 more Russian regions. From July 1, 2020, all regions of the Russian Federation can introduce this tax regime.

Starting from 2021, the exemption from taxation of interest income in Russian banks will be abolished.

Progressive tax rates are likely to be introduced from 2021. Income up to 5 million RUB will be taxed at the rate of 13%, whereas the amount exceeding this threshold will be taxed at the rate of 15%.

A significant reduction in social security rates for IT businesses is expected from 2021.

It is also expected that CFC (controlled foreign companies) of Russian tax residents will be taxed at a fixed amount equal to 5 million RUB. Further details are not available so far.

Russia intends to change or even terminate DTT with some countries if these countries do not agree to increase the rates on dividends and interest stipulated in their treaties with Russia.