Income on Russian bonds may become exempt from Personal Income Tax
On 15 February 2017, the State Duma passed in the first reading a draft of the Federal Law “On Amending Chapter 23 of the Russian Tax Code”, in particular the section on determining the tax base on interest income earned on the marketable bonds of Russian organisations. Draft Law No. 46023-7 was introduced by the Russian Government. According to the proposed amendments, income in the form of interest (coupons) received on marketable bonds of Russian organisations that were issued in 2017-2020 and denominated in roubles would become exempt from personal income tax (the “PIT”) starting from 2018, provided that the amount of the interest (coupon) payment does not exceed the amount of interest assessed under the current refinancing rate of +5%. If the bond yields exceed the threshold, the excess will be taxable for Russian tax residents at 35%. Additionally, the draft proposes to exempt income received in the form of discounts upon redeeming such bonds.