From March 14, 2022 to February 28, 2023, the 4th stage of the capital amnesty will be held

On March 9, 2022, a new version of Federal Law No. 140-FZ* came into force, according to which individuals have the right to disclose information about property, controlled foreign companies (CFC), accounts (deposits) in foreign banks, and cash within the framework of a special declaration.

With respect to declared assets, the State provides exemption from liability for a number of currency, tax and criminal offenses.

The new amnesty differs from the previous one in that a person has the right to amnesty cash, financial assets (the range of possibilities for declaring has been expanded), and redomicilation in relation to a CFC (moving a CFC 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 shares acquired in 2022 from foreign organizations is exempt from personal income tax

The State Duma adopted in the first reading a package of tax measures to support businesses and individuals*.

As part of this package of tax measures, exemption from personal income tax of income of individuals from foreign companies in respect of which the taxpayer was the controlling person as of December 31, 2021, in the form of:

• securities/shares of Russian organizations;

• mutual fund units managed by Russian management companies;

• state securities of the member states of the Union State;

• government securities of the subjects of the Russian Federation;

• municipal securities.

To obtain such an exemption, two conditions will need to be met simultaneously:

1.         securities (shares, units) belonged to a foreign company as of March 1, 2022;

2.         an individual must submit an application for exemption together with a tax return.

* Draft Federal Law No. 84984-8 "On Amendments to Paragraph 4 of Article 75 of Part One and Part Two of the Tax Code of the Russian Federation".

Interest on deposits (account balances) in Russian banks are exempt from personal income tax

As part of the above-mentioned package of tax measures, exemption from personal income tax from interest on deposits from income for 2021 and 2022 is provided. The obligation to pay will arise in respect of income received in 2023. In addition, starting next year, a different approach will be provided for calculating the maximum amount over which interest on deposits will be subject to personal income tax. The calculation will use the maximum value of the key rate of the Central Bank of the Russian Federation, effective as of the 1st day of each month in the specified tax period, instead of the rate on January 1.

The Federal Tax Service of Russia suspended inspections of compliance with currency legislation

According to reports on the official website of the Federal Tax Service of Russia, the tax authorities of the Russian Federation suspended currency control from March 10, 2022 until further notice. However, no additional information has been established regarding the limitation period for involvement in already initiated inspections and it is not known until what point the control was suspended.

At the same time, control will remain over the execution of Presidential Decrees related to special economic measures to ensure the financial stability of the Russian Federation.

Read more in the review of changes in currency legislation.

The Government of the Russian Federation has been given expanded powers in the field of taxation

Amendments have been made to the Tax Code of the Russian Federation*, according to which the Government of the Russian Federation and the supreme executive bodies of state power of the subjects of the Russian Federation have the right in 2022 to issue regulatory legal acts regarding the deferral (installment) of taxes and the extension of tax payment deadlines. Accordingly, it is possible for such decisions to be made by the Government of the Russian Federation; it is necessary to monitor.

*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 organizations to the SAR have entered into force

SAR – special administrative districts on Russian Island (Far East) and Oktyabrsky Island (Kaliningrad).

Based on the amendments adopted by Federal Law No. 18-FZ* dated 02/25/2022, Russian organizations, along with foreign companies, are now entitled to receive the status of an international holding company (MHC).

Preferential conditions are established for such companies, in particular:

• 0% income tax on receipt of MHC dividends from Russian and foreign companies;

• 5% withholding tax on receipt of dividends from public MHCs;

• 0% income tax on the income of the MHC from the sale or other disposal of shares in the authorized 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 the framework of this review is not professional advice and is relevant as of 03/17/2022.