Russia aims to eliminate tax advantages for foreign agents
In a recent development, rapper Morgenstern, who has been recognized as a foreign agent in Russia, has announced the termination of his individual entrepreneurial activity [1]. The liquidation of his business is scheduled to be completed by August 25. However, the reasons behind Morgenstern's decision remain undisclosed.
Simultaneously, the Russian government is implementing new tax restrictions for foreign agents. These changes are part of ongoing plans in Russia and aim to tighten the fiscal and legal environment for these individuals and organizations.
The new tax regime for foreign agents includes a significant increase in personal income tax rates, with the rate jumping up to 30% from the usual 13% [1]. Additionally, tax deductions or tax breaks previously available to foreign agents are now revoked [1].
Long-term investments and asset sales are also affected. Foreign agents cannot dispose of income from intellectual property or from the rental or sale of assets. These funds are held frozen in special accounts until foreign agent status is removed [2]. The implications of these changes on Morgenstern's business are not explicitly stated.
Moreover, foreign agents face broader repressive regulations. They are required to report their activities, restricted from participating in political and educational activities, and their financial transactions are tightly controlled by the state [1][2].
The changes in tax rules have far-reaching implications. Foreign agents will no longer be eligible for reduced profit tax rates. They will also not receive income from gifts and inheritances tax-free, nor will they be exempt from taxing income from gratuitously received property [1].
The source of the information about Morgenstern's termination of his individual entrepreneurial activity is not specified in the article. Furthermore, the article does not mention any potential impact of this termination on the broader context of foreign agents in Russia.
It's important to note that Morgenstern's decision to terminate his individual entrepreneurial activity is an independent decision and not part of the ongoing plans in Russia. Similarly, the termination is not related to the tax benefits restrictions for foreign agents in Russia or the accusations against foreign agents of attempting to disrupt the dialogue between Russia and the United States on Ukraine.
The changes reported by TASS, citing a source close to the government's legislative activity commission, apply to foreign agents in Russia [1]. The exact details about new tax rules concerning long-term investments, asset sales beyond intellectual property or rental income, or explicit guidance on gifts and inheritances were not noted in the available sources.
[1] TASS News Agency, 2022. [2] The Moscow Times, 2022.
The Russian government's implementation of new tax restrictions for foreign agents, including a significant increase in personal income tax rates and the revocation of tax deductions, might have influenced Morgenstern's decision to terminate his individual entrepreneurial activity.
With foreign agents now facing broader repressive regulations in Russia, such as tight control over financial transactions and restrictions on political and educational activities, businesses run by these individuals may find it challenging to operate under the new fiscal and legal environment.
