PAYMENT OF THE PERSONAL INCOME TAX FOR AN EMPLOYEE IN CASE OF AN ADDITIONAL TAX CHARGE FOLLOWING A TAX INSPECTION.
A tax agent may not pay the personal income tax for an employee at its own expense except as in case of an additional tax charge following a tax inspection where the tax agent failed to withhold the tax for no good reason (this situation shall not give rise to the taxpayer’s income).
The company may avoid a fine if it identifies the error, withholds the additional personal income tax, including for the previous year (Letter of the Federal Tax Service No. BS-3-11/4119@ dated 24 April 2019), pays the tax arrears and penalties (for the entire duration of the delay), and files adjusted 2-NDFL and 6-NDFL returns provided that the employee is continuously employed by the company. If his/her employment has been terminated, the company will be unable to withhold any additional tax and transfer the personal income tax for its ex-employee to the budget.
It is necessary to file adjusted 2-NDFL and 6-NDFL returns and notify both the Inspectorate of the Federal Tax Service and the employee of the fact that it is impossible to withhold the personal income tax — in this case, a 20% fine is unavoidable.
As for the period prior to 01 January 2020, the regulations do not provide for any payment of the personal income tax for an employee at the tax agent’s expense (Clause 9, Article 226 of the Tax Code of the Russian Federation).
Federal Law No. 325-FZ dated 29 September 2019
ADJUSTMENT OF THE LIST OF INCOME TYPES EXEMPT FROM THE PERSONAL INCOME TAX
1. Two-way fare to the holiday destination and back for employees working in the North and their family members.
2. Exemption from tax on the compensation for additional days-off granted to take care of disabled children pursuant to Article 262 of the Labor Code of the Russian Federation.
3. One-off benefits of RUB 1,000,000 at the most payable to health care professionals under the government program.
4. Compensation for an extra day-off payable to contracted military personnel.
5. Annual benefit payable to donors with the Honored Donor of Russia award pin. The exemption shall apply to the benefit payable under Law No. 125-FZ dated 20 July 2012.
6. Benefits payable to persons who were exposed to radiation as a result of the disaster at the Chernobyl Nuclear Power Plant, tests at the Semipalatinsk test site, accident at Mayak, and waste dumping into the Techa River. The exemption shall apply to the following benefits:
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under Law No. 1244-I dated 15 May 1991;
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under Law No. 2-FZ dated 10 January 2002;
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under Law No. 175-FZ dated 26 November 1998.
7. Income in specie and in kind earned by veterans, Heroes of the Soviet Union, Heroes of the Russian Federation, Full Cavaliers of the Order of Glory, Heroes of Socialist Labor, Heroes of Labor of the Russian Federation, and Full Cavaliers of the Order of Labor Glory; The exemption shall apply to the following benefits:
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under Law No. 5-FZ dated 12 January 1995;
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under Law No. 4301-I dated 15 January 1993;
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under Law No. 5-FZ dated 09 January 1997.
8. Income in specie and in kind gained by individuals due to the birth of a child. The exemption shall apply to the benefits payable pursuant to enactments of the Russian Federation, acts of the President, acts of the Government, laws, and other acts of regional authorities.
Clause 1, Article 217 of the Tax Code of the Russian Federation (enacted by Federal Law No. 147-FZ dated 17 June 2019)
WRITE-OFF OF INDIVIDUALS’ BAD DEBTS IS EXEMPT FROM THE PERSONAL INCOME TAX
Eligibility requirements for the personal income tax exemption:
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The legal entity and the individual are not related to each other;
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The parties have not had any employment relations over the entire life of the debt;
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The debt does not qualify as financial aid or consideration (including payment for goods, works and/or services delivered by the debtor).
Clause 62.1, Article 217 of the Tax Code of the Russian Federation (enacted by Federal Law No. 210-FZ dated 26 July 2019)
