Russia’s New Strict Tax Laws Pose Concerns For Forex Industry

Russia has made changes to its tax laws and has made them a lot more stringent. Banks throughout the country has been forced to step up the supervisory functions and things are set to get a lot more stringent as the CRS MCAA comes into play shortly .

The (Common Reporting Standard) governs the taxation of residents in Russia. This essentially requires the banks to voluntarily share all tax information and this has posed quite a few challenges to the forex industry in Russia.

These new rules will make it extremely difficult for Russia residents to hide any foreign currencies they might have stashed abroad. Forex companies often have a significant amount of funds invested overseas and the new CRS could end up hurting them. Forex agents and their clients who make profits of overseas investments will now be required to pay taxes on these profits.

Failure to declare these profits and pay taxes could get both forex agencies and their clients in trouble based on Article 198 of the Criminal Code of the Russian Federation. However, one of the ways that forex agencies can take advantage of the new laws is by viewing themselves as entrepreneurs as this will make their tax calculation and filing a lot simpler.

Forex Agents Should See Themselves As Entrepreneurs

A forex agent who registers him or herself as an ‘Individual Entrepreneur’ will end up paying a lot less in taxes when compared to be registered as a forex agent. To give you a comparison, an individual entrepreneur will pay around 6 percent on their turnover when compared to a forex agent who will pay out 13 percent in personal income tax. That is more than a 50 percent saving for forex agents who register as individual entrepreneurs.

Forex agents need not have any concerns about this registration process as they have the law to back their case. The Civil Code of the Russian Federation, Article 2 makes this clear.

Article 2 says

Civil law regulates the relations between persons engaged in entrepreneurial activities or with their participation, proceeding from the fact that the entrepreneurial activity is an independent activity carried out at its own risk aimed at systematic profit from use of property, sale of goods, performance of work or provision of services

ICE FX is looking to make things simpler for forex agents throughout the country to help them prepare their taxes. ICE FX has brought together a team of lawyers who will create a document on the new tax laws and what forex agents must do to prepare for them.

---