Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

THE TAX ADVISER: Income Tax Changes To Rates and Brackets

Dear Tax Advisor, I have heard there are changes to the personal income tax brackets and rates, is this true?

Yes, after months of speculation and commentary regarding a change in individual income tax rates, Federal Law No. 65-FZ has increased the top rate for personal income tax from 35 percent to 45 percent. The top rate will be effective on income in excess of 300,000 rubles (previously the top rate of 35 percent was applied on income in excess of 100,000 rubles). However, please be aware that although the brackets and rates have changed effective Jan. 1, 1999, the top rate will not become effective until Jan. 1, 2000. This is as a result of the new tax code, which states that tax legislation cannot retroactively worsen a taxpayer's position.

The other new brackets are as follows:

-12 percent on income up to 30,000 rubles;

-15 percent on income from 30,000 to 60,000 rubles;

-20 percent on income from 60,000 to 90,000 rubles;

-25 percent on income from 90,000 to 150,000 rubles;

-35 percent on income from 150,000 to 300,000 rubles;

-45 percent on income of 300,001 rubles and above, (from Jan. 1, 2000).

In addition, please note that the amount of personal income tax excessively withheld during the first quarter of 1999 will be offset against future payments of personal income tax in 1999.

Dear Tax Advisor,

I am the director of a foreign representative office in Moscow, and heard that there have been changes recently to the tax filing and payment requirements that would affect us.

Federal Law No. 64-FZ, recently published and effective April 1, 1999, has changed the profit tax payment and filing procedures for foreign representative offices. Previously, these offices paid profit tax annually based on their annual profit tax return.

The provision in the law that excluded representative offices from the same payment and filing requirements as legal entities has been eliminated by the passage of 64-FZ. Representative offices will now be subject to the same monthly advance profit tax payments as Russian legal entities based on anticipated quarterly profits. Commercial representative offices (payers of the profit tax) will now have to file quarterly tax returns.

Glenn Geffner is deputy director of tax at Deloitte & Touche in Moscow. Please fax any questions to: The Tax Adviser, Deloitte & Touche, 956-5001.