The State Duma lowered taxes for multimillionaires

The Russian authorities are reducing the tax burden on wealthy citizens in response to the massive flight of capital from the country, the scale of which is estimated at tens of billions of dollars since the beginning of the war with Ukraine.

On Friday, July 21, the State Duma adopted in the third and final reading a draft amendment reducing taxes on “personal funds” – personal trust funds for multimillionaires, whose minimum contribution is 100 million rubles.

Instead of the traditional 20% income tax, personal funds will be able to pay 15%, provided that almost all of their income (from 90%) will be received as rentiers – from dividends, interest, royalties or property rental.

“We consider a personal fund as a kind of continuation of an entity, therefore we apply to it the maximum rate that we apply to individuals,” explained Alexei Sazanov, Deputy Finance Minister of the Russian Federation, announcing the draft law.

According to the deputy minister, the transfer of property to a personal fund and the transfer of property from it will not entail tax consequences, in particular in the field of VAT, income tax and personal income tax.

Conceived as an alternative to Western trusts where wealthy Russians are used to keeping their money, “personal funds” appeared in Russia in March 2022. Now they work according to general tax standards – they pay VAT, income tax, and their beneficiaries – personal income tax.

However, this format does not attract Russian dollar millionaires who leave the country en masse. By Count Frank R.GLast year, people with assets of $1 million or more withdrew 3 trillion rubles, or 21% of all funds, from Russian banks. The number of such clients in credit institutions decreased from 46.2 thousand to 46.2 thousand. up to 37.8 thousand

The money of the rich “migrated” abroad. According to data from the Central Bank of the Russian Federation, in 2022 citizens of the Russian Federation transferred a record amount of USD 63.7 billion to foreign accounts, which increased their total volume to USD 94.3 billion. Taking into account the company’s foreign currency inflows that remained in foreign accounts, According to experts from the Center for Macroeconomic Analysis and Forecasts, the total outflow of capital from Russia last year reached a record $239 billion, or 12% of GDP.