The Ministry of Finance in response to the request of the Deputy of the state Duma from the Communist party Valery Rashkin declined to disclose the list of Russian citizens who were exempt from paying taxes in Russia due to the fact that they are under Western sanctions. Putin signed a document that is called “the law of Timchenko”, 4 April 2017.

As Rashkin told the TV channel “Rain”, the list of Russians falling under the new law, cannot be provided as this information is confidential tax. Such a formulation contains the response of the Ministry of Finance on the corresponding Deputy inquiry of a Communist, a copy of which is available to journalists.

“Subject to the provisions of paragraph 2 of article 102 of the Tax code the tax secret shall not be disclosed to the tax authorities, bodies of state extra-budgetary funds and customs authorities, their officials and attracted specialists, experts. Given the above, the submission of the requested information is not possible”, – the document says.

Shortly after the head of state signed a document called “the law of Timchenko,” on the grounds that, as the press wrote, in reality, to use the amendment to Chapter 23 of part 2 of the Tax code can only narrow circle of people from the entourage of Putin, businessmen Gennady Timchenko and Arkady Rotenberg, as well as the head of “Rosneft” Igor Sechin.

The law says that if in the tax period in respect of the individuals there were sanctions of another country, such person may not admit a tax resident of Russia “regardless of the length of stay in the country if there is such a residence in a foreign country”.

As previously reported, the head of the Duma Committee on budget and taxes Andrey Makarov, the law does not exempt individuals from the obligation to pay taxes and report on controlled foreign companies and offshore companies. It is aimed at regulating the taxation of citizens who were foreign tax residents, but due to sanctions are forced to live in Russia.

On March 22 for the law in the third reading refused to vote three Duma fractions – the Communist party, LDPR and “Fair Russia”. The leader of fraction the liberal-Democrats Vladimir Zhirinovsky explained that the party opposed “support for the richest in our country,” and suggested that because of this law could decrease revenues. But in the end the document was still accepted by the deputies-United Russia has a majority in the lower house of Parliament. For its adoption voted by 322 members of Parliament.

There were objections to the law and in the Federation Council. So, when voting on March 29, the Senator from the Irkutsk region Vyacheslav markhayev stated that “the law protects certain caste and aimed at financial support of the people who do not need it”. However, the decision was supported by 132 senators, nine abstained.

The essence of the “law Timchenko”

“The law Timchenko”, which is so called since the submission of the former Deputy of the state Duma Dmitry Gudkov, will operate retrospectively from 1 January 2014.

Persons under sanctions from the West, will return the taxes paid for two years if they are before July 1, 2017, will apply to the tax authority. The Russian government will compose a list of countries, their associations, unions and institutions, the sanctions which give the right of liberation from the status of a Russian tax resident.

According to the text of the approved document, if in the tax period in respect of physical persons there were sanctions of a foreign state, such person may not admit this tax period tax resident in Russia, regardless of length of stay in the country if there is such a residence in a foreign country.

For this citizen, targeted by the sanctions, will need to apply to the Federal tax service of the Russian Federation on the non-recognition of a tax resident of the Russian Federation the document confirming his residency in the foreign country.

As explained in state Duma Committee on budget and taxes, these legislative changes will allow entrepreneurs with business abroad, but living in Russia to avoid double taxation.

The current Tax code provides that Russian tax resident is a citizen, actually residing in Russia at least six months of the year. It is on the basis of this law in 2016, has ceased to be a tax resident of the Russian entrepreneur Alisher Usmanov, who most of the time abroad for medical reasons.

Rothenberg has already hastened to declarethat he will remain a tax resident of the Russian Federation, despite the initiative of the Duma to release from taxes of Russians, came under personal sanctions.

Experts on international taxation noted that, theoretically, such an amendment may give the opportunity to evade taxes only to persons under sanctions, has purchased the residence of offshore companies. Residents of countries such as the UK and Cyprus, can obtain exemption from tax obligations in Russia without any amendments.



The Finance Ministry refused to name the Russians, Putin released from taxes according to “the law Timchenko” 16.05.2017

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