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Increase in the personal income tax rate to 15%

Increase in the personal income tax rate to 15%

15 October 2020

The State Duma Committee approved a tax increase for citizens with an income of over 5 million rubles.

On September 17, the Government of the Russian Federation submitted to the State Duma of the Russian Federation a draft law, according to which income exceeding 5 million rubles. per year, will be taxed at a higher personal income tax rate – 15%.

The increased rate will apply to the following types of income:

• From work,

• From the sale of movable property,

• From renting out property,

• Interest on bank deposits,

• Dividends,

• Income from operations with securities and financial derivatives


• Income of individuals from individual investment accounts,

• Profits of controlled foreign companies,

• Income of tax non-residents from labor activities, etc.

At the same time, in terms of income not exceeding 5 million rubles. per year, the rate will apply

13%, and only in terms of excess over 5 million rubles. the rate will be 15%.

For example, the income of an individual for the year amounted to 20 million rubles. Under current rules

Personal income tax payable will be:

20 million x 13% = 2.6 million rubles.

According to the new rules, personal income tax payable will be:

5 million x 13% + 15 million x 15% = 2.9 million rubles.

Thus, the higher the income, the more significant the increase in the tax burden on

compared with the current one.

There are a number of interesting features:

• Income from the sale of real estate is not subject to the increased rate and will

be taxed, as before, at a rate of 13% (30% for non-residents).

• The tax rate on interest income for non-residents will remain fixed –

13%, while residents in excess of the amount of income in 5 million rubles. will have to

pay 15%.

• The possibility of applying social deductions from income for

operations with securities.

• “Pay extra” the increased tax will need to be based on a notification from

tax authority, which forms it on the basis of information received from

tax agents (employers, banks, brokers, etc.).

Obviously, the new procedure makes the taxation process quite difficult.

administration, because not all processes within the framework of tax compliance for today are automated.

We are ready to analyze the structure of your income, determine potential

risks associated with the new regulation, and develop a personal strategy to minimize them.

Information provided by our partner ALTHAUS Private Tax

Aravana Capital Management provides clients with profitability even during downturns in global equity and bond markets.

Check out the services
15 October 2020
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