Russia poised to increase tax for working abroad

Russian authorities are preparing to introduce a higher tax rate for citizens who work outside the country.

A draft law submitted to the State Duma on Monday would oblige companies to levy a 30% personal income tax on payments to Russians who have lived abroad for more than six months and have lost their tax residency status.

If adopted, the amendments will reportedly come into effect from January 1, 2024, and will apply to employees who use the Russian segment of the internet for work.

Russia’s current personal income tax rate of 13% is deducted automatically by domestic employers. Russians working abroad who are tax residents must pay the tax independently, according to the Federal Tax Service.

In 2021, Russia implemented a progressive tax system with a basic rate of 13%, rising to 15% for those earning over 5 million rubles ($61,500) per year. Non-residents pay 13%, 15%, or 30%, depending on their employment status and the source of their income.

Last year, the Finance Ministry prepared changes to the existing legislation. State Duma Speaker Vyacheslav Volodin said in December that it was “right to cancel preferences for those who have left the Russian Federation and to introduce an increased tax rate for them.”

Commenting on the news, the Finance Ministry explained that the amendments “do not affect employees who work under employment contracts,” stressing that for remote workers on official contracts, “the current tax conditions do not change in any way.” The ministry added that the draft law is still being “finalized” by the government.

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