What will be the income tax for individuals in 2021

2024 Author: James Gerald | [email protected]. Last modified: 2024-01-12 17:37

In 2021, there will be several important changes in corporate and entrepreneurial taxes. The changes will affect 11 regions. The latest tax news is devoted to the rate of income for individuals.

Local and regional changes in the Tax Code of the Russian Federation

With the adoption of bill 886255-7, gradual changes in taxation of several Russian regions began. The first stage started on July 1, 2020, and the second - on January 1, 2021. These are measures taken by the Russian Government to reduce the burden on entrepreneurs and companies doing business in the Far East.

A significant reduction in the tax burden for business structures and individuals working in the following regions is envisaged:

• Primorsky, Trans-Baikal, Khabarovsk Territories;
• Chukotka Autonomous Region and Jewish Autonomous Region;
• Republics of Sakha and Buryatia;
• in 4 more subjects of the federation.

Such measures are introduced to provide active support to business in regions with a problematic climate, often creating extreme conditions.

For the first time, intentions to introduce certain relaxations and toughenings were announced by the Ministry of Finance at a meeting with the regions at the very end of 2019, when the main directions in tax policy for the next economic triennium, from 2020 to 2022, were discussed.

Positive changes are planned this year for companies operating in the educational and medical fields, using a zero income tax rate. The plans for the current year are not the abolition of such a rate, but the consolidation indefinitely.

In June 2020, the President of Russia, during his regular televised address to the citizens of the country, announced the expansion of preferential mortgage programs for the population. A preferential tax regime was introduced for the IT industry and a simplified procedure was introduced for the withdrawal of Russian assets from abroad. However, this televised address announced a tax increase for high-wage citizens.

Large sections of the population with minimal or low official salaries considered this measure to be fair, and lawyers cited examples from the practice of Western countries, in which the tax rate is higher, the more significant the profit is.

How has the personal income tax rate changed?

For more than two decades, taxation in Russia was a flat scale, in which there was a single rate on income received by the population. Both those who received the minimum wage and the millionaires paid the state 13% of personal income tax.

However, from January 1, 2021, there was an increase to 15% for those individuals who earn more than 5 million rubles a year. Ordinary citizens do not have to worry that this increase will somehow affect them, since for such an income you need to earn at least 417 thousand monthly.

After the president clarified it, it became clear that the rate would affect not even 5,000,000, but the part that was earned in excess of the mentioned amount.

Then, political scientists in the opposition press considered the introduction of a progressive scale as a speculative measure designed to increase the rating before the adoption of constitutional amendments. You can also recall the assurances of the Minister of Finance made in February 2020 that there will be no changes in the tax rate until 2024.

However, there are other opinions supported by facts:

1. A. Tabakh, a well-known financial expert, noted that this is the first step towards the introduction of a full-fledged progressive tax.
2. The introduction of 2% on the income of individuals over 5 million per year will give more than 60 billion to the treasury.
3. The tax will affect only 0.8% of the Russian population, but will be used to support socially unprotected segments of the population;
4. With the adoption of amendments to the legislative base, most of it will be directed to regional budgets.
5. The government intends to use the proceeds to treat serious childhood illnesses, purchase equipment for hospitals and expensive medicines needed for children with oncology and rare hereditary diseases.

The Prime Minister of the country explained that the initial figure for raising the tax rate was 3 million rubles, but later the threshold was raised.

Other changes for individuals

In the simplified taxation system, the tax rate will change in both forms - “income” and “income minus expenses”. However, they will not affect everyone either.

To simplify, a transitional period is introduced, in which only those who earn more than 150 million a year and keep more than one hundred employees are interested. Tellingly, the rates of 8 and 20% will apply only to the part earned over the limit. In the future, they will have to leave the simplified system or work for another year, but at higher rates.

Since 2021, the rule for reducing the tax base has not yet been canceled, although such a measure was planned. But until 2024, there is still the possibility of reducing the base for last year's losses by no more than half.

This year, another personal income tax will begin to be charged - on income from deposits in interest and holders of shares and securities. This rule was introduced on January 1, but only applies to those who have more than 1 million rubles on deposits, so most Russians have nothing to worry about.

G. Gref assured depositors that the total amount of all deposits in different banks will be taxed. A. Moiseev, Deputy Minister of Finance, assured that individual investment accounts will not be taxed either.

Regarding the changes that have occurred in 2021, individuals with moderate or middle income have nothing to fear. The profit rate will increase only for those whose annual personal income tax is more than 5 million, and the profit under the simplified taxation system has exceeded 150 million rubles.

Summarize

The reform of the taxation system continues, some taxes are gradually turning into progressive ones, as is customary in the developed countries of the West:

1. Personal income tax will rise by 2%, but will affect only those whose earnings are above 5 million per year.
2. Personal income tax is introduced on deposits and shares, but only for those with a total amount of more than a million rubles.
3. The simplified system becomes inconvenient for entrepreneurs with an income of more than 150 million a year.
4. The money received into the budget will go to the treatment of children and equipment for hospitals.