A new income-tax treaty between the United States and Russia became
effective 16 December 1993, replacing a 1973 agreement. The new
"Convention for Avoidance of Double Taxation and Prevention of Fiscal
Evasion with Respect to Taxes on Income and Capital" applies to all
personal income received after 1 January 1994, with a few exceptions
for investment income. U.S. expatriates are subject to a Russian
income-tax rate of approximately 40 percent unless they reside in
Russia less than 183 days during any 365-day period, and their employer
is not a resident of Russia, and their salary is not borne by a
"permanent establishment" in Russia. The treaty exempts
U.S.-based income such as rents, interest, or profits from Russian tax,
but it eliminates exemptions for participants in intergovernmental
programs, teachers, and specialists, and some exemptions for
researchers and trainees available under the 1973 treaty. During
1994 taxpayers may elect to use the 1973 treaty, if it is more
advantageous. A copy of the treaty is available through the U.S.
Government Printing Office, Washington, DC 20402; tel:
202-783-3238, but it is meaningless without the Russian tax laws and
related regulations, which contain complex income inclusions and
exclusions applicable only to foreigners. Consultation with legal
counsel or a qualified accountant is recommended for specific
issues. The treaty provides for an exchange of information
between U.S. and Russian tax-enforcement authorities to prevent tax
evasion. On 24 October 1993 the U.S. and Kazakhstan also signed a
tax treaty, but it still awaits ratification.
Editor's Note:
See also David R. Tillinghast and Ted Chastain, "Analysis of the
New Income Tax Treaty Between the Russian Federation and the United
States,"
Law of the C.I.S., The Bottom Line 5 (Winter 1994), 1-4. For Law of the C.I.S. subscription
information contact: Chadbourne & Parke, 30 Rockefeller
Plaza, New York, NY 10112; tel: 212-408-5100; fax:
212-541-5406; or 38 Maxim Gorky Naberezhnaya, Moscow 113035, Russia;
tel: 7095-231-1064; fax: 7095-233-5298.
Attorney Lauren B. Homer has provided counsel on registration and other legal matters to a number of U.S.-based ministries and other nonprofit organizations working in Russia, Belarus, Ukraine, and Kazakhstan. She recently formed her own firm, International Law Group, P.C., 7002 Little River Turnpike, Suite E, Annandale, VA 22003; tel: 703-256-2000; fax: 703-642-3841. The firm, which also includes attorneys Tarik Radwan and Ann Buwalda, specializes in international legal counsel for Christian ministries and other nonprofit organizations. Lauren Homer also heads the Law and Liberty Trust which serves as an advocate for legal reform and freedom of religion worldwide.
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© 1994 East-West Church and Ministry Report
ISSN 1069-5664