Russian Ministry of Finance proposes to introduce a progressive personal income tax scale

The Ministry of Finance of the Russian Federation has submitted for discussion by the State Duma amendments to the Tax Code of the Russian Federation, according to whichn personal income tax will be calculated on a progressive scale. If approved, the bill will come into force on January 1, 2025.

The progressive scale assumes the presence of several rates of personal income tax, which will be paid in the following order:

• 13% for income up to 2.4 million rubles per year;
• 15% for income in the range of 2.4-5 million rubles per year.
• 18% for income in the range of 5-20 million rubles per year;
• 20% for income in the range of 20-50 million rubles per year;
• 22% for income over 50 million rubles per year.

The increased rates will be applied not to the entire amount of income, but to the part of it that exceeds the established threshold.

All the participants of the parliamentary hearings unanimously supported the proposal of the Chairman of the State Duma V.V. Volodin on the need to ensure the non distribution of the tax rates. Volodin on the need to ensure that the increase in the tax burden is not extended to the participants of the SWO.

In addition, it is proposed to provide support to families with two or more children in the form of an increase in standard tax deductions and the limit of taxpayer income for the purpose of applying these tax deductions up to 450 thousand rubles per year.

The tax threshold for the self-employed remains at the same rate of 2.4 million rubles per year, with rates of 4% (individuals) and 6% (legal entities).

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Maria Klimenkova, Associate, GRATA International St. Petersburg
Oksana Afanasieva, Partner and Head of Tax Practice at GRATA International St. Petersburg.
E-mail: oafanasyeva@gratanet.com