On 30 September 2019, the Russian Government submitted the Draft Law to the State Duma. The draft law includes the following measures:

  • The bill aims to change the approach to taxing companies in the digital sector. The draft law recommend that the profits of these companies be taxed at the users’ location. This is in line with the current international initiatives under Action 1 of the OECD’s Base Erosion and Profit Shifting (BEPS) project. The Ministry of Finance proposes to tax profits in jurisdictions where digital companies’ users are located and where profit is generated as a result of the engagement, cooperation and contribution of users as well as to take intangible marketing assets into account in the relevant countries in distributing profit.
  • The requirement to submit tax declarations would be eliminated for individual entrepreneurs who pay tax on income under the STS. A transition period is to apply to taxpayers that exceed the limits for the STS so that they won’t have to reconstruct the amount of tax payable;
  • Entrepreneurs under the patent regime may deduct the social security contributions;
  • Changes are made to the tax residence criteria for individuals. A person is considered to be resident in Russia if they spend at least 90 days in Russia for a period of 12 months or if their center of vital interests is in Russia; and
  • The individual income tax rate for non-residents will be lowered from 30% to 13%.