September 25, 2022

RF Ministry of Finance proposes to tighten tax residency rules

In Russia, they propose closing the loopholes in the legislation on Russian-controlled foreign companies and change the rules for tax resident recognitioncountries. This provision is contained in the draft Ministry of Finance on "The main directions of the budget, tax and customs tariff policy", designed for the next three years.

According to current tax legislationa resident of the Russian Federation is a person who spent more than 183 days in the country during the year. The Ministry of Finance, in its amendments, suggests levying taxes on those who spent 90 days in the country or even less if they had business, personal contacts and real estate.

With these changes in tax policyThe agency hopes to reduce the number of refusals from Russian tax residency, which is resorted to by businessmen controlling foreign companies in order not to pay retained earnings tax.

If approved, the amendments will affect anya foreign company, including a cryptocurrency controlled by Russian citizens, said Yuri Brisov, member of the Commission for the Legal Support of the Digital Economy of the Moscow branch of the Russian Bar Association, in a ForkLog commentary.

“If a citizen of the Russian Federation owns a business in a foreignjurisdiction, and in accordance with the proposed initiative will be in Russia for 90 days, then, say, it will have to pay the tax on dividends from cryptocurrency activities according to Russian rules. Thus, instead of the rate of 0-6%, which can be obtained in some foreign jurisdictions, the tax resident of the Russian Federation will have to pay 13% ”, - explains the expert.

At the same time, it does not matter in what way the income was received.

“To date, there is no effectivea mechanism for tracking income in cryptocurrency, however, some scammers have already received “letters of happiness” from the tax service of the Russian Federation. Therefore, soon a significant difference between crypto and fiat regarding tax consequences will be erased ”, - adds Yuri Brisov.

Along with this, the lawyer did not rule out that the new rules could result in disputes with other jurisdictions about the preemptive right to taxation.

“If a person can acquire a residence lessthan six months, therefore, there is a chance that he may be a resident of several countries. Where then to pay taxes? In both countries, in any of your choice or to calculate the days - it is not clear. This gives rise to conflicts and disputes, so many experts are against this approach, " - notes Brisov.

Currently, the initiative of the Ministry of Finance submitted to the State Duma.

Earlier, the Central Bank of the Russian Federation recognized the completely legal blocking of bank accounts of individual entrepreneurs with tax arrears.