Among other things, the amendments include important changes in respect of personal income tax:
1. Introduction of a five-bracket progressive personal income tax rate:
• 13% for income up to RUB 200,000 per month (RUB 2.4 million per year);
• 15% for the portion of income in the range of RUB 200,000–416,700 per month (RUB 2.4–5 million per year). The State Duma had previously recommended setting the 15% personal income tax rate for income above approximately RUB 150,000 per month;
• 18% for the portion of income in the range of RUB 416,700–1.67 million per month (RUB 5–20 million per year);
• 20% for the portion of income in the range of RUB 1.67–4.17 million per month (RUB 20–50 million per year);
• 22% for income above RUB 4.17 million per month (RUB 50 million per year).
The higher rates will apply not to the entire income, but to the amount exceeding the relevant thresholds.
Thus:
• with annual income of RUB 10 million, the effective personal income tax rate is 16.02%;
• with annual income of RUB 50 million, it is 18.8%;
• with annual income of RUB 100 million, it is 20.4%;
2. The personal income tax rates on deposit interest will remain unchanged, but the upper threshold of annual income for applying the 13% rate will be lowered. Now, individuals with annual income above RUB 2.4 million (instead of the current RUB 5 million) will be subject to the 15% rate.
3. The personal income tax exemption on the sale of shares held for more than 5 years will be changed: if income from such transactions exceeds RUB 50 million in a year, tax will have to be paid on a general basis, even if the shares were held for more than 5 years.
4. On the sale of real estate, the financial result will also be taxed at 13% up to RUB 2.4 million, and 15% above that amount (currently, income from the sale of real estate is taxed at 13% for Russian tax residents). At the same time, the 5-year holding-period exemption from personal income tax will remain in place.
5. For tax periods starting in 2025, the tax on the fixed profit of controlled foreign companies (CFC) is payable in the amount of RUB 5 million for each CFC of the taxpayer (currently, the fixed amount of RUB 5 million is payable for all CFCs, regardless of their number).
It is expected that the new provisions will be adopted by the State Duma during the current spring session, which runs until August 5, and will enter into force on January 1, 2025. Among other things, the amendments include important changes in respect of personal income tax:
1. Introduction of a five-bracket progressive personal income tax rate:
• 13% for income up to RUB 200,000 per month (RUB 2.4 million per year);
• 15% for the portion of income in the range of RUB 200,000–416,700 per month (RUB 2.4–5 million per year). The State Duma had previously recommended setting the 15% personal income tax rate for income above approximately RUB 150,000 per month;
• 18% for the portion of income in the range of RUB 416,700–1.67 million per month (RUB 5–20 million per year);
• 20% for the portion of income in the range of RUB 1.67–4.17 million per month (RUB 20–50 million per year);
• 22% for income above RUB 4.17 million per month (RUB 50 million per year).
The higher rates will apply not to the entire income, but to the amount exceeding the relevant thresholds.
Thus:
• with annual income of RUB 10 million, the effective personal income tax rate is 16.02%;
• with annual income of RUB 50 million, it is 18.8%;
• with annual income of RUB 100 million, it is 20.4%;
2. The personal income tax rates on deposit interest will remain unchanged, but the upper threshold of annual income for applying the 13% rate will be lowered. Now, individuals with annual income above RUB 2.4 million (instead of the current RUB 5 million) will be subject to the 15% rate.
3. The personal income tax exemption on the sale of shares held for more than 5 years will be changed: if income from such transactions exceeds RUB 50 million in a year, tax will have to be paid on a general basis, even if the shares were held for more than 5 years.
4. On the sale of real estate, the financial result will also be taxed at 13% up to RUB 2.4 million, and 15% above that amount (currently, income from the sale of real estate is taxed at 13% for Russian tax residents). At the same time, the 5-year holding-period exemption from personal income tax will remain in place.
5. For tax periods starting in 2025, the tax on the fixed profit of controlled foreign companies (CFC) is payable in the amount of RUB 5 million for each CFC of the taxpayer (currently, the fixed amount of RUB 5 million is payable for all CFCs, regardless of their number).
It is expected that the new provisions will be adopted by the State Duma during the current spring session, which runs until August 5, and will enter into force on January 1, 2025.
