July 21, 2024

RF Ministry of Finance proposes to tighten tax residency rules

The Russian Federation proposes to close loopholes in the legislation on foreign companies controlled by Russians andchange 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 legislation, taxA 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 proposes to levy taxes on those who spent 90 days or even less in the country — if you have a 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 inforeign jurisdiction and, in accordance with the proposed initiative, will stay on the territory of Russia for 90 days, then, say, the tax on dividends from cryptocurrency activities, he will have to pay according to Russian rules. Thus, instead of the 0-6% rate that can be obtained in some foreign jurisdictions, a 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.

«Today does not existeffective mechanism for tracking income in cryptocurrency, however, some hodlers have already received “chain letters” from the Russian Tax Service. Therefore, soon the significant difference between crypto and fiat in terms of tax consequences will be erased».— Yuri Brisov adds.

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 residencyin less than six months, therefore, there is a chance that he may be a resident of several countries. Where to pay taxes in this case? To both countries, to any one of your choice, or to calculate days — unclear. 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.