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The increase in taxes on income exceeding 5 million rubles a year, announced by Russian President Vladimir Putin, is only the first step. It is not implausible that in the future Russia will introduce a more complex tax system for the rich and the super-rich, said Mikhail Begunov, lawyer, the managing partner of Tax Compliance law firm, to RIA Novosti.

“It is possible that in the future a complex progressive scale of income taxation will be introduced, as it is, for example, in China, including several differentiated tax rates depending on the income threshold: from 1 to 5 million, from 5 to 10 million and over 10 million rubles”, believes Begunov.

“Thus, in China, a seven-stage system of differentiated income tax rates is used. That is, a tax rate increase is only valid for the part of income exceeding the previous stage. Despite the significant population of China, the country's tax administration is at a high level, which allows controlling cash flow and compliance with progressive taxation laws”, he said, adding that in Britain and France there is a similar taxation principle, but differentiation includes from three to six steps.

“A progression planned in Russia will only consist of one threshold, which involves taxation of income at an increased rate if the threshold exceeds 5 million rubles per year. It is likely that, based on foreign experience, additional income differentiation will be introduced in the future, since in more developed entities, such as Moscow and St. Petersburg, the population with higher income makes up a significant share,” concluded Begunov.

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