State Duma exempts Russians affected by sanctions from taxation

State Duma exempts Russians affected by sanctions from taxation

The State Duma has approved in the third, final, reading a bill that partially exempts persons affected by the Western sanctions from taxation.

An RBC journalist reports that the bill exempting Russians affected by the Western sanctions from taxation on the foreign income has been approved today by efforts of Edinaya Rossia (the United Russia) Party. 322 Deputies voted for the bill, 85 had opposed it, and one Deputy has abstained.

The amendment approved by the lower chamber of parliament has been incorporated into the Tax Code of the Russian Federation.

Andrei Makarov, the Chairman of the Budget Committee of the State Duma, was the author of the bill. According to him, the persons affected by sanctions can not leave Russia and, therefore, are considered tax residents of Russia. If they have fundamental interests in European countries, they may be recognized tax residents of those countries as well.

Makarov believes that talks aimed to avoid double taxation might be ineffective in the current situation.

The Deputy has stated that the amendment just offers any person included into the sanction lists to submit an application to the tax service identifying the country whose tax resident he/she is.

The European Union and U.S. have imposed personal sanctions on more than 150 Russians, including businessmen who used to pay taxes in other countries. For example, Gennady Timchenko (the U.S. sanction list) told in 2012 in an interview to the Russian Edition of Forbes magazine that he “had paid taxes in Finland for a long time” and then became a tax resident of Switzerland. Boris Rotenberg (the U.S. sanction list) has both Russian and Finnish citizenship.

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