IT Specialists Ask Five Pressing Questions To Authorities Regarding ‘Wealth’ Tax

Many hope that the innovation will not affect them.

Last week it became known about the tax authorities’ plans to introduce a tax on excess income. If the amendment to the Tax Code passes, then the income of individuals in excess of 200 thousand rubles per year will be taxed at a rate of 25%. We are talking about salaries, income from civil contracts and dividends. In essence, the initiative affects the interests of everyone who earns a net of $4.3 thousand or more. Devby.io asked highly paid IT specialists and IT company executives what they think about the prospect of an additional tax and whose account it will fall on.

Compliance with Decree #8

“The Decree # 8 stipulates an income tax benefit for HTP residents — 9% instead of 13%. At the end of 2020, the Tax Code temporarily abolished it — first for two years, until the beginning of 2023, then for another two — until 2025. Will the new excess income tax once again adjust the Decree # 8? “For a while” or forever?”

“In the HTP there is a tax benefit on founders’ dividends: for residents of the Republic of Belarus - 9%, for non-residents - 5%. The introduction of a tax on excess income will not automatically cancel this benefit?

Will resident founders pay much more than non-resident founders?”

Let's say it cancels. As the CEO of one of the service companies believes, a large disparity in the tax burden for owners from the Republic of Belarus and other countries is possible. Not in favor of Belarusians.

“The owner of a company in Belarus with a Belarusian passport, who is a tax resident of the Republic of Belarus, will pay 25% of the excess dividend amount, and the owner of a company in the Republic of Belarus with a passport and tax residence of the Russian Federation will pay a total of 13%.”

If an employee has two jobs

“I have an employee with a second full-time job. How are our accounting departments asked to calculate his excess income?”

Income from services on professional income tax

“What about those IT specialists who are on the professional income tax? For those who receive income from abroad, there are no limits; the tax on any amount is 10%. Will this norm definitely continue? How long will it last?

If so, will the companies take it upon themselves?”

As for the salaries of highly paid employees, it seems that everything will be very individual. So far, no executive has told Devby.io that they will compensate for salary cuts for valuable employees.

The owner of a small outsourcing company firmly said that he would not bear the costs of the new tax.

“Gross will not change due to the tax on “super income”, that is, wages will drop”.

Another large service company said that they would wait for complete clarity from the tax authorities before making decisions.

“We will wait for the final version of the Code and, if there are any unclear points, we will ask for additional clarification. After that we will decide.”

When discussing problematic issues, IT specialists express a faint hope that this amendment will not affect them.

“I still hope that there will be benefits for HTP”.

Tax consultants find it difficult to comment on these hopes. They are also waiting for clarification regarding the tax amendment in general and the HTP in particular.

“It may well be that the new legislation will correct Decree # 8,” says one of them. “If not, it should be written directly that the benefits for HTP remain”.

Last time, when the income tax increased by 4 percentage points, many companies took on the difference. Some companies split costs in half with employees.