From 14 March 2022 to 28 February 2023, the 4th stage of capital amnesty will take place
On 9 March 2022, the new version of Federal Law No. 140-FZ* entered into force, under which individuals are entitled to disclose information about property, controlled foreign companies (CFC), accounts (deposits) in foreign banks, and cash funds under a special declaration.
With respect to the declared assets, the state provides immunity from liability for a range of currency, tax and criminal offences.
The new amnesty differs from the previous one in that a person is entitled to amnesty cash funds and financial assets (the range of assets eligible for declaration has been expanded), and redomiciliation in relation to CFCs (relocation of CFCs to special administrative regions) is not required.
* Federal Law No. 140-FZ of 08.06.2015 “On Voluntary Declaration by Individuals of Assets and Accounts (Deposits) in Banks and on Amendments to Certain Legislative Acts of the Russian Federation”.
Income in the form of securities and interests received in 2022 from foreign organizations is exempt from personal income tax
The State Duma has adopted in the first reading a package of tax measures to support businesses and private individuals*. As part of this package of tax measures, it is proposed to exempt from personal income tax individuals’ income from foreign companies in relation to which the taxpayer was a controlling person as of 31 December 2021, in the form of:
securities/interests in Russian organizations;
units in mutual funds managed by Russian management companies;
government securities of the member states of the Union State;
government securities of constituent entities of the Russian Federation;
municipal securities.
To obtain such exemption, two conditions must be met simultaneously:
the securities (interests, units) were owned by the foreign company as of 1 March 2022;
the individual must submit an application for the exemption together with the tax return.
* Draft Federal Law No. 84984-8 “On Amendments to Article 75(4) of Part One and Part Two of the Tax Code of the Russian Federation”.
Interest on deposits (account balances) in Russian banks is exempt from personal income tax
As part of the above-mentioned package of tax measures, exemption from personal income tax on interest income from deposits for 2021 and 2022 is provided. The tax payment obligation will arise in respect of income received in 2023. In addition, starting next year, a different approach will be used to calculate the threshold amount above which interest on deposits will be subject to personal income tax. The calculation will use the maximum key rate of the Bank of Russia in effect on the first day of each month in the relevant tax period, instead of the rate as of 1 January.
The Federal Tax Service of Russia has suspended checks for compliance with currency legislation
According to reports on the official website of the Federal Tax Service of Russia, Russian tax authorities suspended currency control from 10 March 2022 until further notice. However, no additional information has been provided regarding the limitation period for liability in already initiated audits, and it is unknown until what date the control has been suspended.
At the same time, control will remain in place with respect to compliance with the Decrees of the President of the Russian Federation related to special economic measures to ensure the financial stability of the Russian Federation.
Read more in the overview of amendments to currency legislation.
The Government of the Russian Federation has been granted expanded powers in the area of taxation
Amendments have been made to the Tax Code of the Russian Federation*, pursuant to which the Government of the Russian Federation and the supreme executive authorities of the constituent entities of the Russian Federation may, in 2022, issue regulatory legal acts concerning deferral (instalment payment) of taxes and extension of tax payment deadlines. Accordingly, such decisions may be adopted by the Government of the Russian Federation; this should be monitored.
* Federal Law No. 52-FZ of 09.03.2022 “On Amendments to Articles 4 and 45 of Part One of the Tax Code of the Russian Federation”.
Amendments on the relocation of Russian companies to special administrative regions have entered into force
SARs are special administrative regions on Russky Island (the Far East) and Oktyabrsky Island (Kaliningrad).
Under the amendments adopted by Federal Law No. 18-FZ* of 25.02.2022, Russian companies, on an equal footing with foreign companies, are now entitled to obtain the status of an international holding company (IHC).
Preferential conditions are established for such companies, including:
0% corporate income tax when an IHC receives dividends from Russian and foreign companies;
5% withholding tax when receiving dividends from public IHCs;
0% corporate income tax on IHC income from the sale or other disposal of equity interests in the charter capital and shares of organizations.
* Federal Law No. 18-FZ of 25.02.2022 “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation”.
The information provided in this review does not constitute professional advice and is current as of 17.03.2022.
