Personal income tax object: concept, structure

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Paying income tax is the responsibility of any individual receiving income in Russia (and abroad). The correct calculation of the amount payable to the budget is possible only with the correct definition of the object of taxation. Let's try to figure out what is meant by the terms "payers of personal income tax" and "object of taxation".

Legal basis

Personal income tax (or PIT) affects everyone. The common name for personal income tax is income tax. Any individual who has received income is subject to it.

Such concepts as "personal income tax payers", "object of taxation" and "tax base" are described in chapter 23 (almost the most voluminous) of the Tax Code. Also, the legal basis for income tax includes:

• Federal Law N 281-FZ of November 25, 2009.
• Federal Law N 251-FZ of 2016-03-07.
• Federal Law N 279-FZ of December 29, 2012.
• Federal Law N 229-FZ dated2010-27-07.
• Order of the Federal Tax Service of the Russian Federation dated October 30, 2015 N ММВ-7-11/485 and, of course, letters of the Federal Tax Service of the Russian Federation and the Ministry of Finance clarifying disputes.

Basic concepts

According to the provisions of the tax legislation of the Russian Federation, and in particular - article 209, the object of personal income tax is the income received by taxpayers:

• in the country and abroad by citizens recognized as residents;
• from sources within the Russian Federation by citizens who are non-residents.

The fact of residency is established according to the rule: the days of the actual (confirmed) stay of a person on Russian territory are summed up for 12 continuous months. Absence periods are calculated without taking into account being abroad for the purpose of education and / or treatment (but not more than six months). It also takes into account travel abroad for the purpose of fulfilling labor (or other) duties that are related to the provision of services or the performance of work in offshore hydrocarbon deposits.

A tax resident is a citizen staying in Russia for more than 183 days. By law, all his income is taxed at the generally accepted rate of 13%.

By analogy, non-residents are persons staying in our country for less than 183 days (without a break). This category includes foreigners who have registered for temporary work, students who have arrived in Russia on an exchange, and our citizens who live in the country for less than the specified number of days. Persons belonging to non-residents transfer to the state treasuryincome tax at a rate of 30%. Naturally, the object of personal income tax for residents and non-residents also has a difference.

Here it is important to recall that the category "income" is not only receipts in cash, less often in kind, it is also a material benefit.

And more. The third paragraph of Article 207 of the tax legislation says that Russian military personnel who are on conscription or contract abroad are recognized as tax residents of our country, regardless of the actual time of residence in our country. As well as employees of state authorities and local self-government, officially seconded to work abroad.

Personal income tax object: concept and structure

Tax legislation interprets the income of an individual as an economic benefit that can be calculated in monetary terms. That is, there is no income if there is no benefit. As an example, consider the situation with compensation for travel expenses to a courier or expenses for an employee who arrived from a business trip.

Economic benefit is considered income only if three conditions are met:

• its size is subject to estimation,
• you can get it with money or property,
• it can be determined according to the rules prescribed in the 23rd chapter of the Tax Code of Russia.

Article 208 of the tax legislation refers to the objects of personal income tax (2016-2017) received from sources in Russia and/or abroad:

• funds received from the sale of shares (parts) in the chartercapital, securities, movable and immovable property, etc.;
• Receipts from the rental of personal property;
• payments for insured events; the object of personal income tax for insurance payments is the premium paid (exceptions are provided for in article 213 of the Tax Code of Russia);
• pensions, scholarships and similar payments;
• revenues from the use of registered copyrights or any related;
• income received from the use of any vehicle, as well as fines and other sanctions imposed for their downtime;
• wages and other monetary rewards received on the basis of contractual relations in the civil law field;
• dividends and/or interest earned from participation in companies of both Russian and foreign formations;
• other income derived from legal activities in our country and abroad.

Economic benefit received in Russia is also subject to personal income tax. It includes:

• income from the operation of pipelines, power lines, other means of communication, including computerized networks;
• remunerations and other payments assigned for the performance of labor duties to members of ship crews flying the Russian State flag;
• payments to successors for deceased persons who had insurance.

This list is considered open. This suggests that in a critical economic situation it can be increased.

What is not subject to personal income tax

In the same tax legislation there is a list of personal income taxes that are not declared for personal income tax. These include:

• material assistance paid to one of the parents no later than 12 months from the date of birth of the baby (but not more than 50,000 rubles);
• maternity and unemployment benefits;
• monetary compensation for harm caused to he alth at work;
• Federal benefits, excluding temporary disability payments (a sick child is no exception), and other compensation payments;
• cash gifts from an employer worth no more than four thousand rubles;
• alimony;
• remuneration for donor assistance (for donated milk, blood, etc.);
• state pensions, labor and social benefits;
• grants (gratuitous payments) aimed at maintaining culture, education, art in our country, provided by Russian, foreign organizations or international (the list is determined by the Government of the Russian Federation);
• payments going to volunteers under civil law contracts, the subject of which is the gratuitous performance of work;
• prizes awarded by foreign, international or Russian organizations for outstanding achievements in the field of education, literature, culture, art, science and technology, as well as the media (lists approved by the Government of the Russian Federation and the Governments of the country's constituent entities);
• housingand/or land plots provided free of charge under any federal or regional program;
• compensation payments guaranteed by the legislation of various levels of government (within certain limits).

And also the objects of taxation exempted from personal income tax include lump-sum payments that are made:

• in the form of targeted social assistance to vulnerable groups of the population from budgets of different levels;
• due to force majeure;
• employer to family members of employees either retired or deceased;
• victims in Russia from terrorist attacks or family members of victims of terrorist attacks.

The entire list is contained in articles 215 and 217 of the Tax Code of the Russian Federation. It is recognized as limited and under no circumstances is subject to expansion.

From January 1 of this year, Article 217 received a new paragraph. Now income tax is not charged on the cost of an independent assessment of the qualifications of an employee.

Calculating the tax base

PIT taxpayers calculate the tax base from the object of taxation in cash. All incomes of an individual for a certain period are summed up, then multiplied by the rate.

The tax base is determined separately for each recognized type of income, even if the rates for them are different.

The amount of income can be reduced. To do this, various deductions (standard, property, social, etc.) are deducted from it or are not taken into account in advance.

The received positive amount is fixed and transferred to the budget. If the result is negative, then the individual pays nothing, since his tax base is recognized as zero. Also, a negative result cannot be carried over to subsequent periods or taken into account in further calculations.

If the object of taxation of the personal income tax taxpayer was received in foreign currency, before calculating the tax base it is converted into rubles at the rate of the Central Bank of the Russian Federation on the day of its actual receipt.

One caveat: when establishing a tax base, it is forbidden to minus deductions from wages approved by a court decision. These can be utility bills, alimony, loan payments, etc.

Other features of calculating the tax base of the object of personal income tax are defined by articles 211-215 of the Tax Code of the Russian Federation:

• the tax base for concluded insurance contracts is considered in Article 213;
• income as a material benefit may appear when saving on interest on the use of money received on a loan, when purchasing goods, as well as works, services under civil law agreements concluded from individual entrepreneurs, organizations or individuals who are recognized as interdependent with respect to the taxpayer, as well as when purchasing securities;
• if the object of personal income tax is income received in kind, then it is appliedarticle 211 of the Tax Code of Russia (“in kind” is services, goods, property, that is, everything that a person receives in non-monetary means, but “in kind”); here it is necessary to take into account the fact that income in kind is recognized as received from an individual entrepreneur and / or a company (organization);
• certain categories of income of citizens who arrived from abroad, taxed in our country, are considered in Article 215 of the Tax Code of the Russian Federation;
• principles for paying income tax on income earned from equity participation in various organizations are spelled out in article 214;
• from January 1, 2016, the object of personal income tax can be reduced upon withdrawal from the members of the society, and not only upon the sale of a share (or part).

Bets

The general tax rate is 13%. It applies to most of the income received by a tax resident. Naturally, wages are the first on the list, followed by remuneration for civil law contracts, income from the sale of property and other benefits not specified in articles 2-5 of the tax legislation.

There are several cases prescribed in the norm when the income of a non-resident of Russia is recognized as the object of personal income tax. They are subject to a general rate of 13%. Here are some of them:

• income of foreign citizens working on the basis of a patent for individuals;
• income of foreigners invited as highly qualified specialists;
• income of participants in the federal aid programvoluntary migrants (former compatriots) from abroad to our country; including their family members who wish to relocate permanently together;
• income received from the employment of crew members whose ships sail under the national flag of our country;
• objects of taxation of personal income tax payers - foreigners or persons; deprived of citizenship who received temporary asylum on the territory of Russia or were recognized as refugees.

The tax legislation provides for a number of personal income tax objects to which rates apply: 9, 15, 30, and 35%.

9 percent rate

Applicable when received:

• Economic benefits to founders from trust management of securities coverage. Such economic benefit is subject to personal income tax and can be obtained on the basis of the purchase of mortgage participation certificates received before January 1, 2007 by the securities coverage manager.
• Interest on mortgage-backed securities (in particular bonds) issued before January 1, 2007.

15% rate

Produced upon receipt of dividends received by individuals, non-tax residents, from organizations registered in Russia.

The objects of personal income tax, to which the 30% rate is applied, are as follows:

• income received from securities issued by Russian organizations, and the rights on them must be accounted for in the deposit account of a foreignholder (nominal), a custody account held by a foreign authorized holder, as well as a custody account of depository programs paid to persons for which information was not provided to the tax agent;
• all economic benefits derived by an individual who is not recognized as a tax resident, excluding income subject to taxes at the rate of 13% and 15%.

35% rate

Used when:

• if interest is received on deposits in banks, but it may exceed the amount of interest, which is calculated either on ruble deposits (assuming the refinancing rate of the Central Bank of the Russian Federation increased by 5%), or on deposits in convertible currency (assuming a rate of 9% per annum);
• economic benefits from the actual value of any prizes and/or winnings received as a result of participation in contests, games and other events, for the purpose of advertising services, goods, works (subject to winning or declared value of the prize over 4,000 rubles);
• income, as payment for the use of funds borrowed from consumer cooperatives, contributed by their members (shareholders);
• if material benefit is recognized as an object of personal income tax taxation, which resulted from savings on interest on credit (borrowed) funds in case of exceeding the amounts specified in the Tax Code (Article 212, paragraph 2);
• if interest is received for the use of funds received from shareholders in the form of loans by an agricultural credit consumer cooperative.

NDFL forindividual entrepreneurs

IPs are legally recognized as independent payers of mandatory fees and taxes. A merchant pays income tax if he conducts business under the general taxation system.

In the case of using hired labor and paying for it, an individual entrepreneur becomes a tax agent for personal income tax.

Principles for calculating and paying this tax by merchants are spelled out in Article 227 of the Tax Code. The main one is that the object of personal income tax for individual entrepreneurs is only income earned from doing business. Moreover, income can be expressed both in cash and in kind, as well as a material benefit, which is defined in Article 212 of the tax legislation.

Tax base

The entrepreneur determines it individually for each type of income, if different rates are set for them. It is legally provided to tax the income of an individual entrepreneur at a general rate, that is, 13%.

The third paragraph of Article 210 of the Tax Code of the Russian Federation determines that the tax base at a rate of 13% is calculated as a monetary form of income, except for tax deductions prescribed by Articles 218-221 of the tax legislation, taking into account the specifics provided chapter 23 of the Code. It follows that individual entrepreneurs have the right to reduce the tax base for the following tax deductions:

• recognized as standard by Article 218 of the Tax Code of Russia;
• investment, prescribed by Article 219.1 of the Code;
• social, prescribed by Article 219 of the Tax Code of the Russian Federation;
• when carrying forward losses in operations with financial instruments of forward transactions and / or securities for future periods (Article 220.1 of the Tax Code of Russia);
• property disclosed in article 220 of the tax legislation;
• professional, prescribed by article 221 of the Tax Code of the Russian Federation;
• when carrying forward losses from membership in an investment partnership for future periods (Article 220.2).

Professional tax deductions are subject to the rules that allowable expenses will be:

• justified;
• documented;
• appeared as a result of activities aimed solely at obtaining benefits.

The described criteria must be met at the same time.

At the same time, some types of expenses that must be included in the professional deduction are clearly spelled out:

1. Amounts of insurance fees transferred to compulsory pension insurance and medical insurance.
2. Amounts of taxes (excluding income tax). Moreover, the amount of tax on the property of individuals paid by an individual entrepreneur is deductible only if the taxable property is recognized as being used directly in business (excluding housing, garages and summer cottages).

A professional deduction can only be applied at the end of the tax period. It is provided by the tax inspectorate, taking as a basis the personal income tax return filed by an individual entrepreneur.

Post scriptum

In short, the object of personal income tax is an economic benefit receivedtax resident in any period (year, quarter, etc.) both in the form of cash (currency can be both Russian and foreign), and in kind (this includes material benefits).

The Tax Code, Article 208 of Russia describes a list of objects of taxation received both from sources in our country and from sources of foreign origin. In addition, it defines criteria that reflect the types of these objects. They include primarily wages, remuneration for the performance of labor duties, economic benefits from the sale of property and / or its use (for example, leasing), insurance premiums, dividends, roy alties, etc.

Income received from Russian sources is subject to personal income tax for both residents and non-residents.

An object of taxation received by an individual in a convertible currency is converted into rubles before determining the tax base at the rate of the Central Bank of Russia, determined on the actual date of receipt of income.

If income is received in the so-called in-kind form (goods, services, works, property rights, etc.), their value should be included in indirect taxes.