If the proposed changes are passed and remuneration paid by domestic employers to remote employees based outside the country is treated as income from Russian sources, those payments will be subject to PIT at the rates of 13% (15%) for residents and 30% for non-residents.
We should clarify that remuneration for the performance of employment or other duties and for work, services and actions performed outside the Russian Federation is classified for taxation purposes as income received from sources outside the Russian Federation. Such income when received by an employee who is not classed as a tax resident of Russia is not subject to PIT in Russia. This position is confirmed by Letter No. BS-4−11/9947@ of the Ministry of Finance of 15 July 2021.
The Ministry of Finance also proposes:
- Setting allowances within which PIT and social contributions are not payable on compensation payments made to remote employees in connection with the use of their own or rented equipment (currently, the non-taxable amount of such compensation payments is not prescribed by law but must be established in the employer’s internal regulations and be economically justified)
- Making it easier to obtain social deductions
- Removing the age limit on the standard deduction for children and legally incompetent persons who are dependent on a parent or guardian
- Expanding opportunities for granting property-related deductions
- Setting allowances within which payments related to jobs requiring significant travel and wage supplements in lieu of per diems for rotational shift work are not assessable to social contributions (no more than 700 roubles per day)
B1 is continuing to monitor the situation and will keep you informed of any further developments in the law.