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Employers in Russia to Report Personal Income Tax Quarterly

According to the Federal Law N 113-ФЗ “On Amendments to Parts 1 and 2 of the Tax Code of the Russian Federation, Aiming to Enhance the Tax Agents Responsibility for Not Complying with the Tax and Levy Legislation Requirements” of May 2nd 2015, the following important changes will come into effect from January 1st 2016:

  • From January 1st 2016, tax agents will have to pay the calculated and withheld personal income tax (PIT) amounts to the state no later than the day after the income is paid out to the private person. This rule is laid down in the new version of Paragraph 6, Article 226 of the RF Tax Code.

We would like to remind you that according to the current version of the said paragraph, the PIT amounts are to be paid to the state no later than the day on which the cash income is actually received by the tax agent in the bank or the day the income is transferred from the tax agents’ bank accounts to personal accounts (on their instructions to the bank accounts of third parties). Otherwise tax on income, especially if it is received in cash, is to be paid to the state no later than the day after of the actual receipt of income by the taxpayer.

  • Besides that, p. 6, art. 226 of the RF Tax Code, which is coming into force on January 1st 2016, will contain special rules for vacation and temporary disability allowances (including benefits for the care of sick children): the PIT amounts withheld from these sums will have to be paid to the state no later than the last day of the month in which they were paid to the employees.
  • Tax agents will become responsible for reporting the information on the calculated and withheld PIT amounts to the tax authorities on a quarterly basis.

Failure to comply with the deadline will result in a fine of 1,000 RUB per each complete or incomplete month past the date the report was due (p. 1.2, art. 126 of the RF Tax Code, new version). If more than 10 days have passed since the date the report was due, the tax agent’s bank account transactions and right to electronically transfer money might be suspended (p. 3.2, art. 76 of the RF Tax Code, new version).

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