Progressive tax rate for Individual Income Tax (IIT) is introduced for income that exceeds 5 million rubles

Progressive tax rate for Individual Income Tax (IIT) is introduced for income that exceeds 5 million rubles

11/23/2020

 

Dear Clients and Partners, 

We inform you that starting from January 1, 2021 new amendments to Part 2 of Tax Code (RF Tax Code) will come into force. According to amendments, the progressive tax rate for Individual Income Tax (IIT) is introduced for income that exceeds 5 million rubles. 

According to Federal Law dated 23.11.2020 No. 372-FZ, income that in cumulative total will exceed 5 million rubles since the beginning of the year will be taxed with not the general rate of 13%, but with new rate of 15%. 
When the tax agent calculates the tax amount it is required to pay attention if the limit of accrued tax in amount of 650 thousand rubles was reached or not (5000000*13%). In case the accrued tax exceeds the amount of 650 thousand rubles, then the payment of tax should be according to separate tax rates of 13% and 15%. 
There are some exceptions for tax residents with the following income (tax rate of 13%): from sale of property or as value of property received as a gift (excluding securities), in form of insurance compensation according to insurance contracts and pension contribution payments. 

The income with other tax rates is calculated and paid by tax agent as usually.  

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