According to the bill, these changes are proposed to apply to income received starting from 1 January 2023.

In turn, in its opinion, the Government of the Russian Federation did not support this bill already at the stage of its introduction for consideration by the State Duma of the Russian Federation. The opinion states that the changes provided for by the bill may lead to wages being paid “off the books”, as well as a reduction in the inflow of personal income tax and insurance contributions to the budget. This approach is completely contrary to the state policy both in terms of deoffshorization and in terms of tax transparency. Moreover, the Government of the Russian Federation emphasized that tax rules worsening the taxpayer’s position cannot have retroactive effect. Accordingly, the introduction of this progressive scale for income received from 1 January 2023 directly contradicts the provisions of the Tax Code of the Russian Federation.  

On this basis, we believe that this bill is highly unlikely to be adopted, since it has already failed to receive the support of the Government of the Russian Federation at the submission stage. Moreover, the bill contains provisions that contradict the law, and also fails to take into account the specifics of tax administration, resulting more in an outflow of tax revenues than in the expected inflow to the budget. Thus, the proposed initiative risks remaining merely a “loud” proposal.