The Ministry of Finance wants to impose personal income tax on bloggers on YouTube and Instagram

Bloggers posting content on foreign platforms will pay personal income tax on income received from Russia, the Ministry of Finance came up with such an initiative, a source familiar with the preparation of changes to the Tax Code (TC) told Vedomosti. The information was confirmed by a source close to the government.

On April 24, the government submitted to the State Duma a package of amendments to the Tax Code prepared by the Ministry of Finance. Among other things, the bill proposes to clarify the conditions under which income from the activities of Russians from abroad is subject to taxation in Russia. Changes are proposed to be made to Art. 208 of the Tax Code (income from sources in the Russian Federation and income from sources outside of it).

According to the bill, if Russian domains, network addresses or servers are used in the performance of work, then income from such activities will be subject to income tax in Russia (counted from the source of the Russian Federation) if at least one of three conditions is met. If the individual was a tax resident of Russia (i.e. the performer was in the country for more than half a year) or if the income was received on an account in a Russian bank, or the source of payment (customer) is a Russian organization or individual entrepreneur.

According to a source familiar with the preparation of the draft law, the regulation is aimed at expanding the contour of income that is considered to be received in Russia. If a Russian citizen has received remuneration for work performed for a Russian consumer, he will have to pay personal income tax. And regardless of where this work was done. Now, if, for example, a web designer, a non-resident of Russia, fulfills an order for a Russian company from abroad, he does not pay tax, since this income is not considered received from activities in the Russian Federation, Sergey Kalinin, head of the tax practice of the EPAM law office, explained. This gap in the legislation is planned to be closed – the Russian segment of the Internet in terms of income received is planned to be equated with the territory of Russia, he specified.

Judging by the text of the bill, if a non-Russian segment of the Internet was used to perform the work, i.e., for example, resources from the .com domain zone YouTube or Instagram (the latter is included in Meta, which is recognized as an extremist organization in Russia and banned), then such income is not subject to taxation, even if the funds were received, for example, for showing an advertisement from a Russian company, he said.

The source of Vedomosti assured that this “loophole” will also be closed – foreign bloggers who post content on foreign sites, but receive remuneration from Russia, will also fall under Russian tax legislation and personal income tax will be withheld from their income. Another interlocutor close to the government confirmed that such an approach would be implemented. According to him, this principle is already envisaged by the current version of the bill, but it is planned to correct it and formulate this provision more clearly.

It was planned to impose income tax on bloggers using foreign platforms back in 2021. Then it was supposed to make the platforms themselves – YouTube, Instagram, etc. – tax agents, Vedomosti wrote. Foreign legal entities, such as Facebook (part of Meta, which is recognized as an extremist organization in Russia and banned), YouTube, Instagram, Twitter, TikTok, etc., as tax agents, will be required to pay a “tax for Russian bloggers from income from advertising on the blog, ”said the development plan for the information technology industry in Russia.