Russians with dual citizenship will pay twice as much in taxes

Russians with dual citizenship will pay twice as much in taxes

On October 3, 2024, the State Duma received a bill that promises to double the tax burden for some Russian citizens.
According to the bill, it is proposed to introduce differentiated tax rates for Russian citizens by birth who have not renounced the citizenship of other states (except for Belarus, Abkhazia and South Ossetia). This means that for them the basic personal income tax rate will not be 13%, as it is now, but 26%, and also taxes on vehicles and property will be doubled.
According to the authors of the bill, the doubling of the tax rate “will contribute to an increase in the revenue part of the budget of the Russian Federation” and will not worsen the financial situation of Russian citizens by birth who have lost “economic ties with Russia”.

The proposal to increase tax rates is in line with the draft law on amendments to the Federal Law “On Citizenship of the Russian Federation”, which would require Russian citizens by birth to apply for renunciation of citizenship of another state (except for Belarus, Abkhazia and South Ossetia) within 6 months of the effective date of this law; if they fail to do so, they would have to be deprived of Russian citizenship (Draft Law No. 667678-8: https://sozd.duma.gov.ru/bill/667678-8).

It is still unclear from the proposed changes how the doubling of taxes can compensate for the “loss of economic ties” with Russia and how exactly the “lost ties” should affect the tax obligations and economic interests of the country.
It is important to note that the draft law received a negative opinion from the Russian Government.
As of today, the tax legislation does not allow establishing differentiated rates of taxes and fees, tax benefits depending on the form of ownership, citizenship of individuals or place of origin of capital (Article 3 of the Tax Code of the Russian Federation).
The documents of draft law No. 729266-8 are published: https://sozd.duma.gov.ru/bill/729266-8

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