The Ministry of Finance will force remote workers to pay taxes in Russia

The Ministry of Finance will force remote workers to pay taxes in Russia. The bill is designed to improve the efficiency of the taxation system.

The Ministry of Finance of the Russian Federation on its official website published a press release on the preparation of a bill designed to introduce a number of legal innovations to ensure and improve the efficiency of the taxation system. In particular, it is proposed to oblige employees of Russian companies working remotely to pay taxes in the Russian Federation. This will lead to a significant increase in the tax burden on remote workers, most of whom work in the IT sector.

The ministry’s statement states that in order to increase the efficiency of personal income tax collection, it is proposed to introduce the following key change in the Tax Code of the Russian Federation: to attribute to income from Russian sources remuneration paid by Russian employers to employees working remotely.

Under current law, remote workers, since they are outside the country for more than 183 days a year, are considered non-residents and pay taxes in their country of residence. For non-residents, personal income tax is provided at a rate of 30% only on income received in the Russian Federation, residents pay at a rate of 13% on all income received both in the Russian Federation and abroad. Remote workers are now considered non-residents with zero income in the Russian Federation. The Ministry of Finance does not propose to consider them residents, it only changes the status of their income, it is planned to recognize them as received in Russia. Accordingly, the tax rate becomes equal not even to 13% (as for residents), but to 30% for all income of non-resident remote workers received from Russian employers.

The Federal Security Service of the Russian Federation in May provided data on the number of citizens who left the country in the first quarter of 2022. According to the FSB, 3.88 million Russians went abroad for various purposes. This is a third less than in the last quarter of 2021, but more than in the same period last year (by 46%). Moreover, more than 40% of Russians preferred the space of the former USSR and the majority left the country for non-tourist purposes. Trips to neighboring countries, too, most often, were non-tourist in nature. According to RAEC estimates, in just two months, February and March, about 50-70 thousand IT specialists left Russia. According to the Ministry of Digital Development, about 80% of subscribers of Russian telecom operators who left the Russian Federation in February have returned. Mikhail Mishustin also claims that 85% of IT specialists did not stay abroad and have already arrived back in Russia.

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