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Personal Income Tax For Qualifying Foreigners

According to a special rule, it is necessary to withhold Personal Income Tax (PIT) from incomes of qualifying foreigners.

On February 26 the State Duma passed, in its first reading, a bill that would simplify taxation and visa considerations for some foreign workers in Russia.

The first change would be to how PIT for foreign employees is withheld. If the foreigner's work contract covers at least 183 consecutive days, that employee immediately becomes a Russian tax resident, meaning that they qualify for a tax rate of 13% rather than 30%. Currently, the company must withhold 30% of the wages until the employee is physically in Russia for 183 days, and then apply for a refund of the 17% difference between the two tax rates.

This bill would also amend Article 207 of Russia’s Tax Code to affect work permits for foreign professionals with higher education, including scientists, scholars, and teachers, who could receive permission to work in Russia for the duration of the contract. Currently, a new work permit must be issued every year.

Both amendments are expected to pass into law.

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