Businessmen who have been sanctioned will be exempted from paying taxes. The relevant amendments to the Tax Code of the Russian Federation on Friday were adopted by the State Duma in the second reading. The document allows individuals on the sanctions list to recognize themselves as non-residents of the Russian Federation and pay taxes “at the location of their business or property,” as required by foreign law.
The author of the bill Andrey Makarov, head of the State Duma Committee on Budget and Taxes, explained that these people found themselves in a difficult situation, hitting the sanctions lists. Western tax authorities also consider them to be their residents. And if earlier the problem of double taxation was solved by concluding relevant interstate agreements, then “under the conditions of unprecedented pressure on the country” this method will not work.
At the same time, Makarov assured that non-residents would pay personal income tax from Russian income not 13%, but 30%, so the Russian budget would not suffer.
The head of the Center for Economic Research of the Institute of Globalization and Social Movements, Vasily Koltashov, did not believe the deputy's statements. The adopted amendments to the Tax Code in a conversation with NSN he called it "an insult to Russian law".
“This is not just the protection of citizens, these are privileges,” said Vasily Koltashov NSN. - The presence of someone's property abroad is not the business of the Russian state. And it should not encourage such a situation.”
According to Koltashov, a situation is developing in which the state patches up a hole in the budget by increasing the burden on the population, and “business that has fallen under sanctions is exempted from paying taxes in the Russian Federation, because it allegedly has tax liability to foreign states.”
“This looks like a complete mockery of the Russian state itself. If such a law is adopted, it will become essentially anti-state and hostile to the interests of Russian society. And those who fell under the sanctions will not look like innocent victims who are being persecuted by the US and the EU, but cunning dodgers and cunning people with huge influence,” the source is convinced. NSN.
Koltashov noted that the amendments adopted in the Tax Code will create a situation in which it will become generally unprofitable to pay taxes in Russia, and there will be an interest in falling under sanctions or "proving that you fell under sanctions."
“This law is clearly subversive. On the eve of the presidential election, he jeopardizes the reputation of the executive branch in the eyes of even the least politically interested Russians, because it is impossible to slap the taxpayers, I mean the mass average, in such a frank manner. People are shown what a colossal gap exists in the interests of those who fell under Western sanctions and other citizens of the Russian Federation who need to live in this country, provide for the future, and raise children. It turns out that Russians should welcome Western sanctions, because they reveal the most harmful elements of society,” the economist concluded.
Recall that the EU and the US in 2014 imposed sanctions against 150 Russians and Ukrainians. So, the head of Rosneft Igor Sechin, businessman Arkady Rotenberg and his brother Boris, businessman Gennady Timchenko, as well as deputies, politicians and public figures were on the sanctions lists.
Text Timchenko's law.
Putin signed a law on the exemption of persons subject to sanctions from taxes. The people nicknamed this law - "Timchenko's Law". Let's see what the essence and meaning of the law. Are the oligarchs really exempted from taxes or is it not so? According to the text of the article, we will also refer to the law in question as the “Timchenko Law”.
"Timchenko's Law" is correctly called as follows - "On Amendments to Chapter 23 of Part Two of the Tax Code of the Russian Federation" (adopted by the State Duma of the Federal Assembly of the Russian Federation on March 22, 2017). With the text of the law check out the link.
The law provides for amendments to the Tax Code of the Russian Federation.
Changes to Art. 207 of the Tax Code of the Russian Federation (Taxpayers)
Article 207 of the Tax Code of the Russian Federation defines taxpayers for personal income tax (PIT). Clause 4 was added to this article with the following content:
Clause 4. Art. 207 Tax Code of the Russian Federation
In the event that in the tax period, restrictive measures were applied to an individual by a foreign state, a state association and (or) union and (or) a state (interstate) institution of a foreign state or a state association and (or) union, the list of which is determined by By the Government of the Russian Federation, such an individual, regardless of the period of actual stay in the Russian Federation, may not be recognized in this tax period as a tax resident of the Russian Federation, if in this tax period such an individual was a tax resident of a foreign state.
An individual specified in paragraph one of this clause is not recognized as a tax resident of the Russian Federation on the basis of his application submitted to the federal executive body authorized for control and supervision in the field of taxes and fees, with a document confirming the tax residency of this individual, issued by competent authority of a foreign state (certificate of tax residency).
The application referred to in this paragraph shall be submitted within the period provided for by this Code for the submission of a tax return for the relevant tax period.
Thus, an individual who is a foreign resident and falls under sanctions, regardless of the period of actual stay in the Russian Federation, may not be recognized as a tax resident of the Russian Federation. To do this, you will need to submit an application to the competent authority (Tax Office).
This law (on amendments to the Tax Code of the Russian Federation, which was adopted on March 22, 2017) also refers to other changes that do not relate to tax exemptions for individuals subject to sanctions. These changes relate to income from the circulation of Russian bonds denominated in rubles and issued in the period from 01/01/2017. to 31.12.2020
This often happens when unrelated changes to the law are made in one act.
Thus, the so-called “Timchenko Law” is reduced to changes in Art. 207 of the Tax Code of the Russian Federation.
In addition, it is provided that the "Timchenko Law" applies to legal relations that arose from January 1, 2014. At the same time, an application for the tax period from 2014-2016 can be submitted until July 1, 2017.
Thus, before July 1, 2017, we will find out which of the oligarchs decided to use the Timchenko Law.
What is the meaning and essence of the Timchenko Law?
Since we are engaged in legal analysis, we need to refer to the law.
In order to understand the meaning and essence of the "Timchenko Law" and how the oligarchs who fell under the sanctions were exempted from taxes, we will familiarize ourselves with clauses 1 and 2 of Art. 207 of the Tax Code of the Russian Federation.
paragraph 1 of Art. 207 Tax Code of the Russian Federation
Taxpayers of personal income tax are individuals who are tax residents of the Russian Federation, as well as individuals who receive income from sources in the Russian Federation who are not tax residents of the Russian Federation.
paragraph 2 of Art. 207 Tax Code of the Russian Federation
Tax residents are individuals who actually stay in the Russian Federation for at least 183 calendar days within 12 consecutive months. The period of stay of an individual in the Russian Federation is not interrupted for periods of his departure outside the territory of the Russian Federation for short-term (less than six months) treatment or training, as well as for the performance of labor or other duties related to the performance of work (provision of services) at offshore hydrocarbon fields. raw materials.
Thus, an individual who has fallen under sanctions must actually be in Russia, but at the same time, this person, doing business abroad, is also a tax resident of a foreign state. In theory, a person who has fallen under sanctions and is a foreign resident pays taxes in a foreign country. But, since this person is actually in Russia, then, according to the rules of paragraph 2 of Art. 207 of the Tax Code of the Russian Federation, this person becomes a resident of the Russian Federation. At the same time, such a person “formally” may not receive income in Russia. Offshore the diagrams are still valid.
At the same time, the Timchenko Law does not exempt from paying personal income tax on income received from sources in Russia. Those. income that is “not passed” through offshore companies.
findings
I can conclude that the “Timchenko Law” itself does not so much exempt oligarchs from taxes as it tries to restore the status quo that was in the pre-sanctions period.
However, the very fact of the existence of this law and the problem that it revealed testifies to a strong offshorization our economy. Previously, President Putin has repeatedly called for the deoffshorization of our economy, but to no avail. After all, it is obvious to everyone that all our oligarchs own many of their business assets in Russia through the offshore system, and that is the only reason they are foreign tax residents. Those. in fact, they withdraw money abroad. At the same time, the state also showed concern in the form of the adoption of the Timchenko Law, which makes life easier for them. Although it would be right, in my opinion, not to adopt such laws in a crisis, but to stimulate the deoffshorization of the economy.
For an example, you can read about the offshore scheme OOO Krasnodar Vodokanal. You need to understand that the owner (ultimate beneficiary) can also pay taxes in a foreign country, since he owns a business in Russia through offshore. The question arises - why? But that is another story. And the question itself is rhetorical. It's not about taxes.
In addition, as far as I understand, personal income tax, which was paid by persons subject to sanctions in the period from 2014-2016, will be returned from the budget. From the point of view of wild capitalism, this is correct. From the point of view of the social state, it seems to me that it is not right. After all, it is not only the oligarchs who suffer from sanctions.
The State Duma approved an amendment that allows people who have fallen under sanctions to refuse tax residency in Russia. Its author claims to have created a mechanism in case of "an unmotivated political attack on our country"
The State Duma on Friday, March 17, adopted in the second reading a bill with an amendment that allows people who fall under Western sanctions, even if they have been living in Russia for more than six months.
The amendment will not lead to the loss of "not a single penny" of the budget, but on the contrary, it will lead to an increase in taxation of participants in the sanctions lists, says the author of the initiative, chairman of the Duma Committee on the Budget, Andrei Makarov. Recognizing themselves as tax residents of another state, such persons will have to pay not 13%, but 30% of income received in Russia, he explained. The deputy did not mention the income received by these people in other countries.
Non-residents of the Russian Federation pay personal income tax only on income received in Russia (at a rate of 30%), but not on foreign income. And residents must generally pay tax on both Russian and foreign income at the standard rate of 13%.
People subject to EU or US sanctions cannot leave Russia and are therefore considered Russian tax residents, Makarov says. But according to European tax legislation, the same people can be recognized as tax residents of European countries according to criteria different from Russian ones - if the so-called vital interests of the participants in the sanctions lists are located on the territory of these countries, the deputy noted. “That is, it is enough to have some property, a company, some income [abroad], and you can be recognized by this country as a resident of a particular country,” says Makarov.
In a normal situation, the issue of avoiding double taxation of such people is decided at the negotiations of the financial departments of the countries concerned, the parliamentarian said. But under the conditions of sanctions, the effectiveness of such negotiations is called into question. “But in itself, the discrepancy in the tax systems of countries makes it possible to hold these persons liable in those countries where they can be automatically recognized as residents under their legislation,” the deputy says.
The amendment only invites the participants of the sanctions lists to submit an application to the tax service about which country they are a resident of during the entire period of the sanctions, Makarov insists. “This will allow the state to protect its citizens,” the deputy says. How exactly the refusal of the participants of the sanctions lists from Russian residency will help Russia protect them, Makarov did not explain. But he promised that the mechanism he created could be activated "in the event of an unmotivated political assault on our country."
Makarov accused opponents of his amendment of "dislike for the country" and an attempt to "ignite distrust in the citizens of his country."
Among the more than 150 Russians who fell under the personal sanctions of the EU and the US, there are businessmen who paid taxes in other countries. For example, Gennady Timchenko (US sanctions list) said in an interview with Russian Forbes in 2012 that he “paid taxes in Finland for a long time”, after which he became a tax resident of Switzerland. Boris Rotenberg is a citizen of Russia and Finland (US sanctions).
A Just Russia deputy, Oleg Shein, criticizing the amendments, said that the law was addressed to representatives of Russian big business who fell under sanctions: of the three categories of Russians who fell under sanctions (politicians, heads of state-owned companies and big business), they are the only ones who, before the imposition of sanctions could be permanently abroad.
“Why didn’t they stop it themselves (the adoption of amendments on tax exemption in Russia. — RBC)?!” - the head of the LDPR faction Vladimir Zhirinovsky was indignant. In his opinion, over the years of sanctions, the businessmen who fell under them “were a little poorer”, but the losses of the Russian budget from the adoption of this law will be serious - according to Zhirinovsky, the budget will lose from the return of taxes already paid by the persons subject to sanctions and their exemption from taxes in the future 2 -3% income.
“Oligarchs are getting out of control of the Tax Code. They declare that they are residents of another state and say hello, in fact, to Russian society, ”said Valentin Shurchanov, a representative of the Communist Party faction, at the plenary meeting. The law will give sanctioned businessmen the opportunity not to report to the Russian tax authorities on controlled foreign companies, the deputy believes. “For us, for the Russian budget, this is a bad story. We cannot control revenues that should be directed to the benefit of Russian society,” Shurchanov said. According to him, the deputies of the Communist Party of the Russian Federation also “do not fit in their heads” how it was possible to give such a law retroactive effect (it will allow those who fell under the sanctions to renounce Russian tax residency retroactively, starting from January 1, 2014). The adopted law is unfair, the communists believe: the people who fell under the sanctions now live in Russia, enjoy its benefits and must be Russian residents.
Earlier, one of the defendants on the sanctions list, Arkady Rotenberg, said that it would allow changing tax residency due to sanctions. “I am a tax resident of Russia and I am not going to become a tax resident of other countries,” he said. “Me and my brother pay taxes in Russia. This is a significant amount that will remain in the budget without any talk of compensation or the abolition of the tax burden,” the businessman added.
The Vedomosti newspaper previously reported that amendments to the Tax Code would allow participants on the sanctions list not to report to the Federal Tax Service if they have already reported their income to the tax department in another country. At the same time, you won’t have to pay anything in the Czech Republic, Switzerland or Romania, since there is no controlled foreign company rule there. The same applies to most offshore companies.
Among the more than 150 Russians who fell under the personal sanctions of the EU and the US, there are businessmen who paid taxes in other countries. For example, Gennady Timchenko (US sanctions list) said in an interview with Russian Forbes in 2012 that he “paid taxes in Finland for a long time”, after which he became a tax resident of Switzerland. Boris Rotenberg is a citizen of Russia and Finland (US sanctions).
President of Russia Vladimir Putin signed a law on the tax residency of those Russians who were on the sanctions lists. The corresponding document was published on the official portal of legal information. Why did the authorities decide to take such a step and what is more important in this measure - political or economic? understood Federal News Agency.
As follows from the text of the law, individuals who have fallen under the restrictions may henceforth not pay taxes in Russia, regardless of the length of stay in our country. To do this, they simply need to confirm that in the same tax period they were residents of a foreign state. And the government will determine which sanctions will be subject to the amendment.
“Those who have dual citizenship must declare it, and then they will not fall under double taxation. They will simply pay another state. As far as I know, there are no such people on the Western sanctions list. Well Dmitry Rogozin, Does he have dual citizenship? This is such a political bill that has the goal of providing moral and moral support, ”the head of the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship commented briefly in an interview with FAN Sergey Zhigarev.
According to Lenta. ru , On March 22, the law was adopted by the State Duma in the third final reading. Then the author of the amendment Andrey Makarov explained that the proposed changes are aimed at protecting the interests of Russian citizens who fell under sanctions. After all, a problem arises: a person is formally a resident of the Russian Federation, but sanctions give grounds to recognize him as a resident of any other European state.
The law reads as follows: “If in the tax period an individual was subject to restrictive measures imposed by a foreign state, then this person may not be recognized as a tax resident of the Russian Federation, because he was a tax resident of another country.” To do this, you just need to submit a special application to the authorized department in Russia. And to attach to it a certificate of tax residency issued in another state.
“Even if we assume that all people who fall under the sanctions will be exempted from personal taxes, then there will be no special losses for the economy. If we talk about companies, then there is a scheme to support businesses that have fallen under restrictive measures. This law can be seen as a political gesture, which is addressed to our external rivals, but also has a general economic significance. They make it clear to everyone: those who have suffered from active sanctions will be protected. Roughly speaking, we do not abandon our own. This may include people who will suffer from Western sanctions in the future. The President gave the signal. And how long all this will last, the question is no longer for us. Putin made it clear yesterday that if the sanctions are permanent, then our trade embargoes and counter-sanctions are also permanent. After all, this is a sign to our business: if such circumstances arise, then we will find a solution to support the local manufacturer, ”says an analyst at the Institute of Contemporary Development Nikita Maslennikov.
According to the Tax Code, those individuals who actually stayed in Russia for at least 183 days during the year are recognized as tax residents.
“For many fellow citizens, this is perceived with some skepticism or a sour-lemon aftertaste: they say that everyone close to the authorities was included in the sanctions list. And here the presidential administration needs to comment on the law, its meaning. We need to clearly explain everything, what is the true motivation: those who are on the list got there, but this is a signal to everyone. The tax authorities will weigh everything thousands more times, and there will still be decisions of a by-law nature. As for sanctions, we have already seen precedents when restrictive measures were introduced not because of the events in Crimea, but in connection with alleged suspicions in the supply of some products to countries that are under sanctions. This story will be permanent, so we have developed a mechanism for protecting our own business. And if something happens, we are ready to find new protective measures to compensate for the losses, ”adds the FAN expert.
