Russian Federation: Personal Income Tax Changes

Last Updated: 11 March 1998
This Tax Alert describes changes introduced to the Law on Personal Income Tax (Federal Law of 31 December 1997 No. 159-FZ) as well as Amendment No. 5 to Instruction No. 35 of the State Tax Service on Personal Income Tax (Order of the State Tax Service No. AP-3-08/230 of 8 December 1997).

Changes to the Law

The amendments introduced by the Law on Personal Income Tax came into force from 4 January 1998 - the date of their official publication in Rossiyskaya Gazeta. The corresponding amendments to Instruction No. 35 should be introduced in the near future.

New rates of the tax and exemptions

The new personal income tax rates and income brackets are shown below. These apply to 1998 income (please note that the amounts are expressed in re-denominated roubles):

Taxable income received in the calendar year             Tax payableup to Rbls 20,000                                                12%
from Rbls 20,000 to Rbls 40,000    Rbls 2,400 plus 15% of the amount
                                               exceeding Rbls 20,000
from Rbls 40,000 to Rbls 60,000    Rbls 5,400 plus 20% of the amount
                                               exceeding Rbls 40,000
from Rbls 60,000 to Rbls 80,000    Rbls 9,400 plus 25% of the amount
                                               exceeding Rbls 60,000
from Rbls 80,000 to Rbls 100,000  Rbls 14,400 plus 30% of the amount
                                               exceeding Rbls 80,000
more than Rbls 100,000            Rbls 20,400 plus 35% of the amount
                                              exceeding Rbls 100,000

The new scale slightly eases the tax burden by introducing more brackets and increasing the level at which income is taxable at the highest rate. Exemptions for individuals, children and other dependants, which were previously granted in the amount of one statutory Minimum Monthly Wage (MMW) per month, will now be either nil, one or two MMWs depending on the cumulative income received during the year. The higher the income, the smaller the exemption provided.

Other changes

Companies are now obliged to remit amounts of personal income tax relating to employees at 'dependent' branches (those which do not maintain a separate balance sheet and settlement account), to the authorities where the branch is located; 'independent' branches should already withhold and pay over the tax in this way.

Tax declarations should now also be filed by individuals who receive income from two or more sources even if the combined total income is taxable only at the lowest tax rate.

Interest for late payment of tax by organisations and individual entrepreneurs has been reduced from 0.5% per day to 1/300th of the CBR re-financing rate per day (currently about 0.1%). Interest payable by other individuals remains at 0.3% per day.

Changes to the Instruction

Amendment No. 5 to Instruction of the State Tax Service No. 35 on Personal Income Tax was issued prior to the changes to the Law discussed above and deals with the filing of personal income tax declarations by individuals and the provision of information on employee earnings to the tax authorities.

New tax declarations forms

New tax declaration forms for both Russian nationals and expatriates have been introduced and it has been unofficially confirmed that these are to be used for declaring income earned in 1997.

While the new form for expatriates does not contain any significant changes (mainly additional information to be provided about the individual's employer), the new declaration for Russian nationals is very different from the old form. It consists of thirteen pages (of which three are obligatory while completion of others depends on the individual's circumstances) and contains separate sections for declaring different types of income according to a new system of codes. According to the tax authorities the new form is easier to complete.

Provision of information to the tax authorities

Further to changes introduced to the Law on Personal Income Tax in June 1997, Instruction No. 35 has also been amended to establish new procedures for Russian legal entities and representative offices providing information on the amounts of income paid to employees and entrepreneurs. For income earned in 1998, reporting is required as follows:

  • on a quarterly basis, not later than the first day of the second month following the end of the quarter - in respect of individuals who are not permanent employees of the entity/representative office (including those individuals working under civil law agreements);on an annual basis, not later than 1 March of the year following the reporting year - in respect of permanent employees.

The forms on which this information is to be provided have also been changed. These must be provided in hard copy unless the employer qualifies as one which is required to forward these details electronically. Employers so qualifying include:

  • companies which are professional participants in the capital markets;insurance companies;credit institutions;all employers with an average number of employees exceeding 100.

Other changes

Companies paying out the proceeds of securities sold by or on behalf of individuals may now deduct properly documented purchase expenses incurred by the individual. The income so defined is subject to personal income tax withholding. Previously, such expenses were only deductible on filing an annual tax declaration.

If you feel that any of the issues described above affect you and you would like to discuss them further, please address your usual contact with Coopers & Lybrand in either Moscow or St. Petersburg.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Alla Shaulina on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly:

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.