04.07.08

A Russian organization sent Russian employees to work in a branch office in Kazakhstan for one year. How does it affect their tax resident status in the future for personal income tax? Does the organization bear a responsibility to withhold income tax from the profits received by these employees during the tax period?

The Ministry of Finance answered these questions in Letter # 03-04-06-01/150 from June 3, 2008. According to the TC of the RF, payments and fees for completed work and other responsibilities performed outside of the RF are considered as profits received from sources outside of the RF. As long as an employee is considered a tax resident of the RF, his salary received for work completed on the territory of a foreign country is subject to 13% income tax. A person must calculate and pay his own income tax by filing the income tax declaration at the end of the tax period.

However, employees should not lose heart! If, during the tax period, the employee becomes a non-tax resident, then this person is not subject to income tax on profits received from sources abroad and is not obligated to file tax declaration on these profits (including profits received prior to change in tax status).

The solution is simple: calculate and organize the departure to the branch office so that the tax status will change before the end of the calendar year.

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Source: Российский налоговый портал