Personal income tax: the start of 2012 tax return filing period

Pepeliaev Group remind you about the start of the filing period for 2012 returns. Individuals who generated taxable income in 2011 and have not paid personal income tax on it may start filing their tax returns now. The last day of the filing period is 30 April 2012. Under the general rule, individuals must pay the personal income tax, as stated in their returns, before 15 July 2012.

Individuals have an obligation to file personal income tax returns if:

• they received income from sources outside the Russian Federation;
• they changed their tax residency status in the course of the year;
• they sold property, such as a house, flat, room, cottage, land plot or car that they had owned for at least three years;
• they sold securities without intermediaries (brokers or trustees) or purchased securities with actual acquisition expenses being lower than such securities’ market value; or
• they received taxable income from individuals or organisations (i.e. tax agents) with whom they have an employment or civil law agreement, in case the tax agents had failed to withhold tax when paying out the income to the taxpayer.

In a number of cases, the individual filing the personal income tax return may recover personal income tax overpaid in an earlier period. For instance, individuals who have spent on medical care or education for themselves or their children or made charity contributions are entitled to deduct such expenses from their taxable income. Another opportunity to recover the overpaid tax is by using a property-based tax deduction – this right is granted to individuals who have acquired residential property.

It should be noted that tax returns also need to be filed to obtain credit for tax paid in a foreign state against tax payable in the Russian Federation (if there is a double tax treaty in place to provide for such a credit).

It is important to bear in mind that in order to qualify for tax deductions and tax credits the taxpayer needs to put together a set of supporting documents, otherwise the relevant benefits will not be provided. Hence it would be prudent to start collecting the requisite documents now.

Our experience is that individual taxpayers find it a tedious process to declare their income and expenses and collect all the relevant supporting documents. Indeed, for a person who is not familiar with the intricacies of the tax return process, these misgivings can become a self-fulfilling prophesy.

Lawyers from Pepeliaev Group have many years of experience declaring income on behalf of individuals. We will be happy to assist you in preparing personal income tax returns for 2011 and filing them with the tax authorities.

We can also provide subsequent legal support when the tax authorities examine the tax returns submitted.

Should you have any questions or wish to discuss the terms of instructing Pepeliaev Group lawyers in connection with filing tax returns in 2012, please feel free to contact us.

For further details, please contact:

Anna Krygina, Senior Associate, at (495) 967-00-07 or by a.krygina@pgplaw.ru