The Russian President’s address to the nation

Alex StolarskyPartner, Attorney-at-Law, Schneider Group

Today on March 25, 2020, in his official speech regarding the spread of COVID-19 in Russia, Vladimir Putin announced several measures:

  • The period from March 30 until April 3, 2020, is nationwide declared a period of holidays in which the employees will continue to receive their salaries. Exemptions are being made for certain essential organizations and their employees. (It is equivalent to public holidays. Due to the additional holidays, the complexity of payroll calculation for March and April needs to be considered. )
  • The referendum for voting on the intended amendments of the Constitution will be postponed to a later date.
  • Until the end of 2020, state allowance for sick leaves will be calculated, based on the amount of at least one monthly minimum wage.
  • Maximum state unemployment allowance will be increased up to the minimum monthly wage.

In order to protect small and medium-sized businesses, such businesses will be granted moratoria for the next six months regarding:

  • Obligations to repay bank credits,
  • Obligations to pay taxes, VAT excepted, (micro-businesses are also granted a moratorium for the payment of social contributions to the social funds),
  • Creditors’ applications for bankruptcy and for enforcing debts.

The following amendments regarding taxation should be implemented:

  • The rates of social contributions will be decreased by half from 30% to 15%,
  • Withholding tax on dividends paid to foreign companies will be 15%. Although the wording is ambiguous this seems to apply only to companies in so-called offshore jurisdictions which are often used for tax evasion schemes. Double treaty taxation with foreign countries is to be changed accordingly. If a partner country does not agree, Russia will quit the relevant double taxation treaty.
  • The income of physical persons gained from bank deposits and debt securities will be subject to personal income tax at a rate of 13% if the amount of the investment exceeds 1 million rubles.

Official governmental acts to implement all the announced measures have not been published yet.