Taxes for the rich and business will be changed in Russia

Russian authorities report Gazeta.Ru, prepared tax changes for citizens and businesses. In particular, it is proposed to introduce a progressive scale of personal income tax (NDFL), fees for wealthy Russians will range from 15% to 22%, and income tax for companies will increase from 20% to 25%. The Ministry of Finance submitted amendments to the government on May 28. Who will be affected by the changes, why they are being introduced, and where the proceeds are planned to be directed — in the material of Gazeta.Ru.

On May 28, 2024, the Ministry of Finance submitted a package of bills to the Russian government, including amendments to the budget law for 2024 and the planning period of 2025 and 2026. In addition, amendments are being made to the Tax and Budget Codes. First, they will be considered by the commission on legislative activities, then they will be discussed at a meeting of the Cabinet. According to plans, the State Duma may consider changes already in the spring session, which will allow fulfilling the instructions of President Vladimir Putin, voiced by him in his message to the Federal Assembly on February 29 of this year.

Putin, in his message to the Federal Assembly, instructed to redistribute the tax burden towards those “who have higher personal and corporate incomes.” The State Duma began discussing tax changes on May 20.

What’s changing for people

In Russia they want to introduce a progressive scale of personal income tax (NDFL).

— for income from 2.4 to 5 million per year (from 200 thousand to 417 thousand rubles per month) — 15%;

— for income from 5 to 20 million (from 417 thousand to 1.7 million rubles per month) — 18%;

— for income from 20 to 50 million (from 1.7 million to 4.1 million rubles per month) — 20%;

— for income over 50 million (more than 4.1 million rubles monthly) — 22%.

You will have to pay the increased tax not on the entire amount, but on the amount exceeding the basic income of 2.4 million rubles. in year.

From the materials it follows that the vast majority of citizens will not be affected by tax changes: out of 64 million working Russians, the new scale will affect only 2 million people with an income of 2.4 million rubles per year or 200 thousand rubles per month. This is only 3.2% of working Russians.

Other citizens whose income is below 2.4 million rubles per year will pay 13%.

The income of SVO participants is not subject to an increase in personal income tax, the Ministry of Finance of the Russian Federation concluded.

Even after the introduction of a full progressive personal income tax scale, the Russian tax system will remain competitive compared to other countries, which will avoid the flow of personnel to neighboring countries. After tax changes, Russia will be practically no different from both its EAEU partners and friendly countries— noted in the materials of the Ministry of Finance.

For example, depending on the level of income in Belarus, personal income tax is levied at 13% or 25%, and in Azerbaijan — 14% or 25%, in Armenia — 20%. The maximum tax rate in the UK is 46%, in Germany 47.5%, in Austria 55%, and in France 55.4%.

Due to the new fair tax system, a large number of families with children will benefit, the Ministry of Finance clarified. The tax rate for them will actually be 6% instead of the previously existing 13%.

For families with two or more low-income children, it is proposed to introduce “tax deductions.” They will annually receive back 7% of the 13% personal income tax paid. In fact, the tax rate for them will be 6%. Benefits will be received by families whose average per capita income per family member is below one and a half times the subsistence level — 319,194 rubles per year per person in 2025 conditions. In other words, to receive a tax deduction, the income of a family of four with two children must be no more than 1.3 million rubles per year. Money for benefits will be provided from the federal budget.

The tax rate for interest income from deposits, from the sale of securities and participation interests, dividends, and sold real estate will also be 13% of personal income tax up to 2.4 million rubles and above this amount — 15% without further progression. However, you do not need to pay tax if you have owned real estate for more than three years.

What will change for business

It is proposed to raise the income tax for businesses from 20% to 25%. The current tax rate — 20% — is one of the lowest among developed economies, according to materials from the Ministry of Finance. Thus, in the USA the figure is at 21% (+ state tax), in Argentina, the Netherlands, China and Iran — 25%, in Canada — 38%, and in Australia — 30%. Large businesses said they were ready to raise income taxes, and billionaire Vladimir Potanin spoke in support of this initiative.

An increase in income tax will make it possible, from January 1, 2025, to abandon the use of turnover fees, such as exchange rate export duties, which increase the business’s need for working capital and do not take into account its financial results. Increasing the corporate income tax rate will be a fairer fiscal alternative to exchange rate export dutiessays the Ministry of Finance materials.

Why are tax changes needed?

The Ministry of Finance explained that the tax changes are aimed at building a fair and balanced tax system in Russia. Such a system should solve national problems, including reducing inequality in society and the economy, and eliminate problems of socio-economic development of regions.

The authorities want to use the income received to support social projects, including increasing social benefits, supporting motherhood and childhood, and social infrastructure.

Vladimir Putin, in an interview with Dmitry Kiselev, said that society would accept the new changes normally, and in general, Russians are ripe for selective taxation.

source: Gazeta.Ru