The government intends to combat the reduction of the working-age population not only by attracting foreigners.
This item is contained in the government's materials on the digital economy and was agreed to at preliminary meetings. Now the Ministry of Finance is to develop corresponding amendments to the Tax Code.
It is expected that the amendments will enter into force at the end of next year and create a new taxpayer category for highly qualified foreigners and simplify processes for their obtaining of relevant documentation.
Russia's working-age population is declining due the effects of the demographic crisis of the 1990s. Few children born in that decade means that fewer workers are entering the workforce today. The government sees certain risks in this, in particular, a risk of an economic slowdown. According to the Ministry of Economic Development, a reduction in the economically active population of one million people per year will result in 0.5 percentage points of GDP growth lost.
One way to solve the problem is to attract highly qualified foreign specialists to work in Russia. To this end, the government, is working to implement a program to make such positions more attractive. The program was prepared by the Ministry of Economic Development jointly with the Skolkovo Foundation.
The Russian newspaper Izvestia has confirmed this draft proposal exists although the government has not announced exactly how it intends to simplify the procedure for obtaining a tax residency for highly qualified foreigners.
The press service of the Economic Development Ministry told Izvestia earlier that the draft document would soon be submitted to the government with amendments to the Tax Code developed by the Ministry of Finance and that it would likely come into force in December of next year. The ministry press service also told Izvestia more information would be available when the document is approved by the government.
A tax resident is a foreigner who continuously lives in Russia for at least 183 days a year. If a person stays in the country less than this time and works, then that person's salary is taxed at a rate of 30%. Starting from the 183rd day of official residence in Russia, however, the foreigner becomes a tax resident and pays taxes at a rate like Russian citizens, 13%. From any taxes previously withheld at 30%, 17% are returned back.
At the same time, a foreigner who is officially a highly qualified specialist initially pays just 13% tax. Currently, this status depends on the level of wages. It should be above 167,000 rubles a month.
Roman Zherebtsov, senior lawyer for the Pepeliaev Group, says that "in practice, highly qualified foreign specialists have already been granted a tax privilege in the form of a 13% personal income tax rate on income from work in Russia, and this rate does not depend on whether they are tax residents or not," he stressed. The difference would be simply in gaining the documents necessarily to declare the privilege.
Maria Volkova, head of corporate tax practice for the law firm Leontief and Partners, believes that foreigners could be simplified the procedure for obtaining the necessary information. She said that "currently, certification of tax residency for highly qualified specialists in Russia can be issued only by the Federal Tax Service's Interregional Inspection for Centralized Data Processing on the 183rd day of stay.
"If there is a situation when such a certificate is needed in the state in which the specialist has citizenship, he can get it for the last period, but not for the current one. Also, they may plan to make changes in which not only the personal income tax rate will be 13% from the beginning of the foreigner's work in Russia, but he himself will have the official status of a tax resident from the beginning of work. For example, in order not to pay taxes in the state of citizenship," suggested Maria Volkova.
Changes, most likely, will not affect migrants from Central Asia, lawyers say. For the most part, they are not recruited as highly qualified specialists and more commonly work in Russia on the basis of a patent that is bought for one year.
The government intends to combat the reduction of the working-age population not only by attracting foreigners. It is also planned to stimulate the employment of older people through professional training and the development of a mentoring institute. The state intends to increase the employment of disabled people. To do this, job placement services for them will be improved.
Translated by Alinga Consulting Group.
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