Tax Amendments to Improve Long-Term Savings

The Russian Ministry of Finance has prepared tax amendments to improve long-term savings

A bill aimed at improving tax instruments for the formation of long-term savings was approved at a meeting of the Russian Government.

The amendments provide for the following changes:

🔘Additional motivation for employers to participate in the LTS

It is proposed to take into account the savings contributions of employers under the long-term savings (LTS) program as part of expenses when taxing profits, and not to subject them to insurance premiums. At the same time, savings contributions will be taken into account in expenses in an amount not exceeding 12% of the amount of expenses on labor costs, and insurance premiums will not be levied on amounts within 12% of the base for calculating insurance premiums for a specific employee for the billing period.

🔘Alignment of personal income tax conditions for “long-term products”

It is proposed to set the personal income tax rate at 13% (15%) for the tax base for income received in the form of payments under a long-term savings agreement, depending on the amount of the tax bases. Thus, it will be equal to the rates currently in effect for insurance payments under insurance contracts, pension payments, as well as for income from transactions with securities and transactions with derivative financial instruments recorded in an individual investment account (IIA).

In addition, the bill proposes:

🔘Extending the tax deduction to insurance premiums under life insurance contracts

🔘Retaining the ability to apply the old procedure when determining the tax base for personal income tax on insurance payments under life insurance contracts

🔘Clarifying the minimum period for receiving a deduction

📌 Read more in the material from the Ministry of Finance of Russia

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