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Thread: NEW work permit rules

  1. #1
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    NEW work permit rules

    From Expat Telegraph:

    On July 1 2010, the Federal Law on the Legal Status of Foreign Citizens will come into force in Russia.
    The legislation aims to simplify the complicated rules which govern the hiring of foreign workers in the country, and make it easier for Russian companies to hire skilled expats.
    Under previous rules, work permits for foreign workers were valid for a maximum of one year, and could take up to a year to obtain.
    The legislation introduces a new term, “highly qualified foreign professional,” which applies to foreign citizens with key skills in a particular field, and whose salary in Russia will be at least two million rubles (around £43,000 per year).
    Employers will be able to obtain work permits for these professionals for up to three years, which can be renewed on a three yearly basis if a contract is agreed upon by the parties.

    Evgeny Reyzman, a legal counsel at law firm Baker and McKenzie in Moscow, said that the new legislation would have a positive effect on Russia’s economy. “Before, the system was very inflexible and burdensome. Companies had to seek permission to employ a foreign worker, which was very time consuming and costly.
    “Now, not only will businesses be able to hire specialists more easily, but the amount of specialist workers that can move here will not be subject to any quotas. This will make investment in Russia much more attractive.
    “Additionally, a working permit will automatically qualify skilled foreign workers for residency permits, which did not happen before.”

    Does anybody know anything about this new law?

    I have just received my new work permit, but I don't earn 43000 pounds. Can I apply for residency anyway, or is residency only for very highly paid professionals? Does this mean that poorer professionals/teachers will still be obliged to pay a large sum of money to get a place on the annual quota for temporary residency?

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    I can't answer your question but I am glad to see that you are back. Welcome!

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    There are some 20 regulations currently being prepared in relation to this new Law. Needless to say, none of these are expected to be issued before 1 July. One may deal with this option for "permanent residency" status, but this will apparently ONLY be valid for the duration of the employment contract. It is currently a mystery why anyone should therefore want to apply for this status. One reason for NOT applying would seem to be a permanent resident would have to take the Russian driving test in order to drive legally.

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    NEW work permit and residency rules

    Thanks!
    I suppose if it sounds as if it is too good to be true (or better and new), it probably is.

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    I have just received my new work permit, but I don't earn 43000 pounds. Can I apply for residency anyway, or is residency only for very highly paid professionals? Does this mean that poorer professionals/teachers will still be obliged to pay a large sum of money to get a place on the annual quota for temporary residency?
    toughnut- the new rules are about work visas and they are for employers. There is a quota for work visas but highly paid specialists will now be outside the quota.

    Residency is not connected with work- you can get residency and be unemployed if you have money to support you in a Russian bank.
    The first step to residency is temporary residency :TRP or вид на временное проживанное. To get this you need either to get in the TRP quota (not the work visa quota) or be married to a Russian citizen. And yes - it is in practice necessary to 'buy' a place on the quota if you want residence in a big city like Moscow and you are not married to a Russian.

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    Thank you, but...

    “Additionally, a working permit will automatically qualify skilled foreign workers for residency permits, which did not happen before.”
    Thank you. But does this not mean these highly paid skilled workers can get TPR etc without marrying somebody who is Russian or buying a place on the quota for Moscow?

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    I heard that from 1st July, the computer systems will be all interconnected and they will have stricter control of visas and make it harder to make work permits which people used to make in order to stay in Russia the whole year, not to work. They will also have stricter control of people living here on 90 day visas.
    How true is this, does anyone know more about this?

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    re:

    I recently got my work permit and coming back to Moscow on a work visa however I have not applied for the work permit under the "highly qualified worker" category.

    Q1. If I now draw a salary of over Rbl 2 million a year, will I pay 30% tax for 183 days and then 13% or can I start paying 13% tax from day 1 ?

    Q2. Can my work permit which is currently valid for 1 year be changed to 3 years validity by virtue of the increased salary drawn ?

    Thanks in advance.

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    Quote Originally Posted by bob View Post
    I recently got my work permit and coming back to Moscow on a work visa however I have not applied for the work permit under the "highly qualified worker" category.

    Q1. If I now draw a salary of over Rbl 2 million a year, will I pay 30% tax for 183 days and then 13% or can I start paying 13% tax from day 1 ?

    Q2. Can my work permit which is currently valid for 1 year be changed to 3 years validity by virtue of the increased salary drawn ?

    Thanks in advance.
    A1: Normally you pay 30% for the first 6 months and then the tax is credited when you do your tax return at the end of the year. However, I can remember that some others were able to apply to the tax department with a request to be considered tax resident from the first day. It isn't a right, but you can request it. A tax advisor may be able to help you apply for that status.

    A2: It's only my best guess, but I think the "Highly Qualified" visa regime would only apply to new visas. You *may* be able to talk some sense into the FMS officers and have them change your visa without leaving Russian. But more likely is that you will have to do a visa run to apply for a new visa. It's probably easier to wait until close to the end of your current visa and then apply for a new one under the "Highly Qualified" system.

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    Quote Originally Posted by DavidB View Post
    A1: Normally you pay 30% for the first 6 months and then the tax is credited when you do your tax return at the end of the year.
    That means that I pay 30% for the 1st 6 months and then for the rest I do not pay any tax till the time the tax is adjusted for the rest of the year @ 13%. Am I correct ?

    For eg. if my total tax liability at the end of the year comes to Rbls 260,000 (2 million @ 13%) and I am paying tax of Rbls 50,000 every month (30% on Rbls 166,000) I would have paid more than my tax liability at the end of 6 months. I do not have to pay any more and in fact claim for a refund at the end of the year.

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    That's correct, but I think the credits only start in the following tax year, because you have to apply to the Federal Tax Service for the "credit" tax.

    There are 2 options for the correction of overpaid taxes - the most common is to "credit" that tax against the next year's tax. The other option is to request a refund (payment) from the Tax Service. But the Tax Service is very slow, so refunds could take a long time.

    It's best to try to get early "tax resident" status from the Tax Service before you start employment, so that you don't have to worry about different tax rates.

    Another option, if you're a company shareholder, is to take a dividend instead of a salary. That way, you would pay 9% and it will be paid in bulk in March of the next year (deadline is March 28).

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    2 million salary? cash only?

    or would that be considered as a lump sum and can include paid housing, car with driver, and so forth. then the actually 'salary' could be quite less and more of 'us' could qualify.
    There is no greater treasure then pleasure....

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    Quote Originally Posted by Benedikt View Post
    or would that be considered as a lump sum and can include paid housing, car with driver, and so forth. then the actually 'salary' could be quite less and more of 'us' could qualify.
    The real question - why not just pay the total package to the employee, and they can then pay for accommodation, etc. themselves? There is no difference from a tax perspective, because "benefits in kind" are taxed as regular income.

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    because

    Quote Originally Posted by DavidB View Post
    The real question - why not just pay the total package to the employee, and they can then pay for accommodation, etc. themselves? There is no difference from a tax perspective, because "benefits in kind" are taxed as regular income.
    sometimes companies buy apartements as and investment and to use for their key employees and it is cheaper for them in the long run, to provide accomodation, and a car with driver, at the going rate,instead let an employee look for it. also, if a 'new' guy comes to town, he should start working immideately and justify his high salary and not spend time flat hunting and the like.( that's how it was explained to me...)
    There is no greater treasure then pleasure....

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    Quote Originally Posted by Benedikt View Post
    sometimes companies buy apartements as and investment and to use for their key employees and it is cheaper for them in the long run, to provide accomodation, and a car with driver, at the going rate,instead let an employee look for it. also, if a 'new' guy comes to town, he should start working immideately and justify his high salary and not spend time flat hunting and the like.( that's how it was explained to me...)
    I understand now - originally thought you were talking about a normal accommodation allowance.

    In this case, I think the easiest would be to write the total salary amount on the employment contract. Then have the employee sign a separate contract for apartment rental and car/driver. Each month, the employer could deduct the apartment/car/driver expenses from the total salary. Permission to make automatic deductions should be included in the separate contract.

    The only thing you should be careful of, is that the prices charged to the employee for the apartment and car/driver should be "market" prices (i.e. arm's length pricing). That is definitely one of the more subjective areas of taxation law, so a good tax consultant is essential.

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