Russian govt approves package of bills to improve tax system
MOSCOW. May 30 (Interfax) - The Russian government on Thursday approved a package of bill introduced by the Finance Ministry to amend the budget law for 2024 and the 2025-2026 planning period, and the Tax and Budget Codes, the government's press service said.
For the Tax Code, the ministry proposes three main groups of changes. To scale up the progression principle in the individual income tax from the current two to five gradations of the annual income and five rates. A new progressive scale would look as follows: for incomes of 2.4 - 5 million rubles - 15%, for 5 - 20 million rubles - 18%, for 20 - 50 million rubles - 20%, and for over 50 million rubles - 22%. For incomes below 2.4 million rubles per year the rate would remain the same, at 13%.
A second key change would see the profit tax increased from 20% to 25% and a substantially different approach to taxation of small and medium-sized enterprises, or SMEs (in order to remove the economic sense of business "fragmentation" and thus make competition healthier). Thus, the ministry proposes raising simplified-taxation system thresholds for earnings of up to 450 million rubles [for 2024, the bar is set at around 265 million rubles] and for core assets of up to 200 million rubles with a simultaneous VAT requirement for taxpayers grossing more than 60 million rubles. A business would have the option to pay a VAT of its choosing: either a flat 20% tax rate (10% for a certain category of goods) with all deductions, or a 5% rate without a right to deductions for earnings of 60-250 million rubles and a 7% rate for earnings of 250-450 million rubles.
The proposed changes also include deductions, both for individuals (with an average income level) and businesses (with a high investment level) and an "averaging-out" of the rental burden for mining companies with a parallel scrapping of exchange-rate-linked export duties, a tax amnesty for 2022-2024.
Along with other targeted amendments proposed by the Finance Ministry, these tax changes should bring around 2.6 trillion rubles in 2025 into the national budget.