RBC reports Russia’s tax service and central bank are developing criteria to automatically flag undeclared business income from money transfers

Russia’s Federal Tax Service and central bank are jointly developing criteria to automatically flag income Russians earn from undeclared business activity, the Russian business news outlet RBC reported, citing two sources (the article is behind a paywall; a summary is available from Frank Media).

The criteria under consideration include the frequency of transfers — the “primary” factor, though no specific payment count or time threshold has been defined — the geography of transfers, with regular interregional payments potentially treated as business income, and the timing of transfers, with tax authorities scrutinizing large volumes of payments made during business hours.

The criteria will not apply to transfers made to oneself or to payments among close relatives, one of RBC’s sources said. That definition will be interpreted as broadly as possible, RBC reported — potentially extending to people in a common-law marriage with the sender or recipient.

In late March, it emerged that the Finance Ministry had drafted a bill to expand the ongoing data exchange between the Federal Tax Service and Russia’s central bank. The proposal would introduce automatic monitoring of Russians’ income to identify business activity disguised as ordinary money transfers. The Federal Tax Service clarified that the “starting point” for such monitoring would be income exceeding 2.4 million rubles per year — 200,000 rubles per month. The Bell said that a large portion of money transfers are currently not taxed in practice, and that payments for services, rent, or goods are frequently disguised as personal transfers.