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Thousands of Emigrés Facing Unexpected Tax Bills as Russia Tightens Enforcement on Global Income
As it faces a widening budget deficit and declining energy revenues, Russia’s Federal Tax Service (FTS) has begun issuing retroactive tax demands to Russian citizens residing and working in Kazakhstan, according to a report by Vedomosti.
The tax demands target income earned during 2022 and 2023 by Russian nationals employed by Kazakh companies, many of whom paid local income tax in Kazakhstan ranging from 5% to 20%. Despite that, the Russian tax authority is now treating such employment as remote work from Russia, thus making it subject to Russia’s personal income tax (PIT) system—typically 13%, or 15% for high earners.
Tax Classification Controversy: Remote Work vs. Foreign-Sourced Income
According to Russian tax law, individuals who spend 183 days or more in Russia within a calendar year are classified as tax residents and are thus taxable on their worldwide income.
Russian tax inspectors argue that if such individuals were working for foreign employers (in this case, Kazakh firms) while residing in Russia, then their income qualifies as Russian-sourced and should be taxed accordingly.
However, tax experts warn of misinterpretations and oversimplifications.
Double Taxation Treaty Complications
The Russia-Kazakhstan Double Taxation Treaty (in effect since 1996) stipulates that employment income should be taxed where the work is physically performed. Thus, if a Russian citizen was living and working in Kazakhstan, Kazakhstan should retain taxing rights—regardless of the taxpayer’s Russian residency status.
However, many individuals failed to submit tax residency certificates to Kazakh authorities, which is a legal requirement to invoke treaty protection. This oversight has jeopardized their eligibility for tax credit mechanisms and now exposes them to double taxation.
Systemic Risk for Russian Emigrés in Post-2022 Diaspora
Following the invasion of Ukraine and the 2022 military mobilization decree, tens of thousands of Russians emigrated to neighboring countries, including Kazakhstan, Georgia, and Armenia. Many continued remote work or found local employment without comprehensive tax planning or legal support.
This new wave of tax enforcement could signal broader cross-border tax scrutiny and reinforce the need for:
- Tax residency planning
- Timely submission of tax residency certificates
- Proper interpretation of double tax treaties
- Legal assistance for compliance
Russia’s Fiscal Outlook Driving Enforcement
Russia’s aggressive pursuit of cross-border tax revenue comes amid:
- Soaring military expenditures
- Falling oil and gas revenues
- Weakening ruble
- Strained fiscal reserves
The tax authority’s pivot to overseas income is seen as part of a broader effort to expand the tax base and clamp down on outbound capital and labor flows, particularly among high-skilled workers and managers.
Key Takeaways for Tax Professionals and Expat Clients
- Russians in Kazakhstan may face back taxes for 2022–2023, even if they paid Kazakh income tax.
- The 13–15% Russian PIT applies if the FTS classifies them as tax residents who worked remotely.
- Double taxation treaty relief depends on submitting valid tax residency certificates.
- Legal review and cross-border tax planning are now essential for all Russian emigrés working abroad.
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