The new tax will affect a greater number of Russians than expected

Credit: Alexey Kudenko | RIAN

The new tax on income from bank deposits may affect Russians whose total assets are worth even less than RUR 1 mio, Izvestia reported.

President Vladimir Putin announced a new personal income tax on interest earned from deposits exceeding RUR 1 mio ($15,530) during his address to the nation on the coronavirus outbreak on March 25. The authorities later explained that the tax would apply to each specific deposit, not their total amount; however, it appears that all of a person’s accounts will be actually summed up.

Moreover, experts from the Expert RA agency and BCS Premier investment company estimated that the tax would even apply to some long-term deposits of less than RUR 1 mio if the interest is 7–8% per annum. This happens because the tax applies to a certain level of income from those deposits, not the amount proper.

As a result, this tax may affect 2-3% of Russian depositors, not 1%, as was previously assumed. This can lead to an outflow of money from long-term deposits, which in turn will negatively affect the banking system.

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