RS From problem to solution Income tax return - a right for some, an obligation for others…

Income tax return - a right for some, an obligation for others…

March 2011

Traditionally Russian people have to file their income tax returns within the first months of the new calendar year following the tax year, though Russian citizens are not the only people who have to submit their taxes to the state, in some cases people who do not have Russian citizenship are required by law to do so as well. In some cases, income that is received outside Russia must be reported too.

Duty to report to the Russian budget

If you do not have Russian citizenship, when and under what circumstances do you have to report your income to the Russian tax authorities? The obligation is imposed on foreigners who:

  • Qualify as residents for taxation purposes, which imply that over the past 12 months they stayed in Russia for a total of 183 days or more
  • Receive income from sources inside and/or outside Russia.

Eligibility for tax deductions

There are cases when foreigners who qualify as residents for taxation purposes are not required but are allowed to file income tax returns to get tax deductions (for example, you can get back some of the money previously paid to the state as tax). For instance, deductions can be claimed if you buy residential real estate in Russia.

Under the Russian law, income tax return for the tax year must be filed by the 30th of April of the next year, however the 30th of April, 2011 lands on a Saturday so the deadline has been postponed to the next business day which is the 3rd of May, since the 1st of May is a public holiday and lands on a Sunday so the Russian law states that the following day will be a day off as well.

Leaving Russia…

If a foreigner plans to stop doing business in Russia and to leave its territory before the end of the year, he or she must submit a tax return at least one month before leaving; the income tax must be paid within 15 days of filing the tax return.

Liability for silence

According to the Russian law if you fail to submit your tax returns, then each month that passes the date when you were supposed to submit your credentials, you might be fined 5% of the amount payable as tax. For the purposes of this fine, one calendar month plus one day equal two months, two calendar months and one day equals three months and so on. The total amount of the fine may not exceed 30% of the amount of the tax and may not be less than 1,000 Russian rubles.

In conclusion, if Russian international agreements define different rules for the taxation of foreigners than those described above, the rules of an international agreement will apply.

Services of ICLC

The audit and consultancy company ICLC (International Consulting and Legal Centre) has been operating in the Russian tax consulting market for over 17 years, providing tax consultancy services to foreign citizens and businesses.
In addition to private tax consultations, ICLS offers legal aliens residing in or visiting Russia a range of additional services including help in the preparation and filling out of personal income tax returns as well as help with submitting tax returns to the Russian tax authorities. Getting professional services is the easiest way to avoid accidentally breaking the Russian tax law.