In 2020, the Russians will withhold 6% of payroll tax in addition to 13% of personal income tax. With a new deduction, individual pension capital (IPC) of citizens will be formed. The Russian Ministry of Finance, together with the Central Bank, drafted a bill in March 2019.
What will the new tax give?
According to Finance Minister Anton Siluanov, the introduction of a new tax and the introduction of IPC will allow the government to increase pensions to 20%. It will be retained from all official incomes of citizens, including wages. These funds will form the funded part of the future pension.
The Ministry of Finance intends to accumulate the capital of taxpayers in non-state pension funds. By introducing mandatory deductions, the Russian authorities want to encourage citizens to independently accumulate future social benefits.
Withholding tax on the IPC is planned directly from the salary. As a result, the difference between the accrued and the “net” amount payable will be 19%. Of these, 6% is a tax on IPC, 13% is personal income tax.
When is it introduced?
The bill has been prepared, but has not yet been considered by State Duma deputies and has not been signed by the president, so the Finance Ministry does not name the exact date. The probability of introduction in 2020 is high.
There is no final mechanism for transferring employed citizens to a new taxation scheme - specialists from the relevant ministry are considering various options, including automatic transfer.
There is no single decision on the mandatory fiscal contribution - the possibility of refusing to pay it on the basis of a written application of the employee is being considered.
The transition to the new algorithm for pension contributions will be phased, with an annual increase in contribution by 1%. The table of the new payroll tax will look like this:
In total, the transition will take 6 years. Experts doubt that the introduction of an additional fiscal contribution will solve the problem of pension payments. Employers often deliberately reduce official salaries in order to reduce their mandatory contributions.
Not all employees will agree that they keep an additional 6% of their savings. Many will refuse if the state gives them such an opportunity.
The Russian authorities are going to motivate the able-bodied population to additional deductions by providing tax benefits to payers. Which ones is not yet clear.
Mandatory contributions for employers
There are three premiums that are mandatory but not taxable. These are the contributions:
- pension insurance (22%);
- health insurance (5.1%);
- social insurance (2.9%).
Their calculation and transfer to the FSS is the responsibility of employers.
Next year, insurance premium against bankruptcy may be added to the compulsory insurance premiums imposed on employers. Its rate will be 0.02% of the Payroll Fund (PAYF).
The Russian deputies have already sent a package of relevant bills to the government and are awaiting expert opinions on each document. The introduction of a new type of compulsory insurance will protect employees in the event of bankruptcy of the employing company and non-payment of salaries due for this reason. The total amount of deductions from the payroll will increase from 30 to 30.02%.
Personal income tax and possible changes
All individuals who receive income are required to pay personal income tax (income tax).
Table Personal income tax payroll as a percentage:
|Personal income tax rate||Types of income|
|13%||• salaries under labor and civil law contracts with employees-citizens of Russia;|
• salaries to citizens of the EAEU countries;
• payment to highly qualified foreign specialists;
• income of citizens who apply for and work in the Russian Federation under a patent;
• compensation for persons who have received temporary asylum in the Russian Federation.
|30%||• salaries of non-resident employees of the Russian Federation.|
In 2020, changes in personal income tax rates are expected. First Deputy Prime Minister and Minister of Finance Siluanov believes that the percentage of deductions should be the same for everyone. The corresponding bill has already been prepared - it is likely that the State Duma will approve it at the upcoming autumn session.
Will personal income tax rate increase in the near future? This possibility was discussed, but there is no clear explanation on this subject. The Ministry of Finance has not yet planned such measures, although work on a large-scale tax reform in the Russian government continues.
Earlier, independent experts of the RANEPA performed calculations and came to the conclusion that it is possible to balance the Russian budget by increasing the income tax on individuals by 4% - from 13 to 17%.
Next year, a rate hike to 15% is not ruled out - economist Arkady Dvorkovich has said this more than once. A rate increase of 2% will provide an additional 1.5 trillion rubles to the state budget.
Self Employment Taxation
The self-employed will have to legalize their income as early as next year and transfer fiscal payments to the budget. The law governing the taxation of self-employed persons has become one of the most resonant this year.
In 2019, deductions from the income of self-employed were carried out experimentally in four constituent entities of the Russian Federation: Moscow, Moscow Region, Tatarstan, Kaluga Region. At the end of the year, the experiment ends - the tax regime is introduced for all Russians falling into the self-employed category.
A special tax regime allows you to work without registration and pay preferential rates on fees received:
- 4% - if the income is received from an individual;
- 6% - in the case of receipts from individual entrepreneurs and legal entities.
Often freelancers, bloggers, legal advisers and other categories of self-employed citizens provide services to individuals and legal entities - in such situations, differentiated rates for each category are applied.
Initially, lawmakers planned the introduction of taxation for such taxpayers until 2029, but now the terms have decreased.