Quick:
which major city holds the title of “billionaire” capital of the world?
Not New York. Not Hong Kong. Not London. The answer is Moscow.
The Russian capital has consistently held the title as eighty-four of
the world’s richest, worth a total of over $366 billion, make the city
their home.
While most of Russia’s wealthy citizens live in Moscow, the country still boasts an impressive collection of billionaires, claiming more than any other country except the U.S. and China. This year, eight Russian billionaires placed in the top 100 on Forbes’ Wealthiest Billionaires List. All total, Russia is home to 110 billionaires.
That is, for now. There’s a lot going on inside Russia that could change its status as a home for the über wealthy. At the top of the list? Death and taxes.
The recent tragedy involving the downing of Malaysian Boeing airliner MH17 and the subsequent potential for more sanctions have rattled markets and nerves. Reportedly, Russia’s money-makers are increasingly worried about the future of Russia’s $2 trillion economy as governments and companies look to cut ties in wake of the crash.
That’s not the only thing that has wealthy tongues wagging. Also making news is the prospect of higher taxes. Andrey Krutov, an MP in the Fair Russia party, has plans to introduce a bill that would impose an additional tax on Russia’s top earners. The bill would target taxpayers making 12 million rubles per year (currently US $344,069.25) and would boost the top rate to 30%. The proposal, if implemented, would bring in nearly 300 to 500 billion rubles (US $8.6–14.3 billion) in the first year alone. The funds would be used to develop Crimea and Sevastopol, a move that has led Krutov to call the tax a “solidarity tax” in a nod to a similar tax in Germany after the fall of the Berlin Wall.
Russia currently imposes a flat tax of just 13% on income, making it extremely tax advantageous. Russia hasn’t always had a flat tax: the old system was a progressive PGR -0.21% system with a top tax rate of (wait for it…) 30%. On January 1, 2001, the flat tax rate was implemented under President Vladimir Putin with many hailing it as a massive success.
The flat rate attracted global attention in 2013 when French actor Gerard Depardieu publicly denounced French President Hollande’s millionaire’s tax and sought out a new tax home in Russia.
In response to Depardieu’s public move, Russian Deputy Prime Minister Dmitry Rogozin posted on Twitter TWTR -1.05%:
Roughly translated, that means: “The West has an especially poor
knowledge of our tax system. When they learn about it, we expect a mass
migration of wealthy Europeans to Russia.”
That didn’t quite happen like Rogozin expected. In fact, it’s arguable than more Russian money has traveled west than western money traveling to Russia in the past year.
A move to increase the top tax rate to 30% would both move the tax system closer to a progressive tax scheme (like the one in the US) as well as put Russia’s tax rates on par with other countries in the G8 (er, G7 since Russia was excluded earlier this year). It’s a big leap for Russia’s wealthiest citizens but not one that would be totally unexpected. There were whispers soon after the implementation of the flat tax at a lower rate that the system might need to be tweaked eventually.
Eventually may turn out to be now. Increasingly, there have been numerous calls for changes in Russia’s tax system as expenses in the country are on the way up. Russia’s Finance Minister Anton Siluanov suggested increases as recently as last week that would “equalize the taxation of revenues from dividends and wages.” Last year, Russian Deputy Prime Minister Arkady Dvorkovich suggested an increase in the personal income tax rate to 15% – this was a change in policy from 2012 when he advocated keeping the flat tax at 13%.
While those older proposals didn’t gather much momentum, this time things might be different. The current tax increase bill, which is being drafted by a group of members of parliament, will be introduced in the fall where Krutov expects it will meet with support.
While most of Russia’s wealthy citizens live in Moscow, the country still boasts an impressive collection of billionaires, claiming more than any other country except the U.S. and China. This year, eight Russian billionaires placed in the top 100 on Forbes’ Wealthiest Billionaires List. All total, Russia is home to 110 billionaires.
That is, for now. There’s a lot going on inside Russia that could change its status as a home for the über wealthy. At the top of the list? Death and taxes.
The recent tragedy involving the downing of Malaysian Boeing airliner MH17 and the subsequent potential for more sanctions have rattled markets and nerves. Reportedly, Russia’s money-makers are increasingly worried about the future of Russia’s $2 trillion economy as governments and companies look to cut ties in wake of the crash.
That’s not the only thing that has wealthy tongues wagging. Also making news is the prospect of higher taxes. Andrey Krutov, an MP in the Fair Russia party, has plans to introduce a bill that would impose an additional tax on Russia’s top earners. The bill would target taxpayers making 12 million rubles per year (currently US $344,069.25) and would boost the top rate to 30%. The proposal, if implemented, would bring in nearly 300 to 500 billion rubles (US $8.6–14.3 billion) in the first year alone. The funds would be used to develop Crimea and Sevastopol, a move that has led Krutov to call the tax a “solidarity tax” in a nod to a similar tax in Germany after the fall of the Berlin Wall.
Russia currently imposes a flat tax of just 13% on income, making it extremely tax advantageous. Russia hasn’t always had a flat tax: the old system was a progressive PGR -0.21% system with a top tax rate of (wait for it…) 30%. On January 1, 2001, the flat tax rate was implemented under President Vladimir Putin with many hailing it as a massive success.
The flat rate attracted global attention in 2013 when French actor Gerard Depardieu publicly denounced French President Hollande’s millionaire’s tax and sought out a new tax home in Russia.
In response to Depardieu’s public move, Russian Deputy Prime Minister Dmitry Rogozin posted on Twitter TWTR -1.05%:
That didn’t quite happen like Rogozin expected. In fact, it’s arguable than more Russian money has traveled west than western money traveling to Russia in the past year.
A move to increase the top tax rate to 30% would both move the tax system closer to a progressive tax scheme (like the one in the US) as well as put Russia’s tax rates on par with other countries in the G8 (er, G7 since Russia was excluded earlier this year). It’s a big leap for Russia’s wealthiest citizens but not one that would be totally unexpected. There were whispers soon after the implementation of the flat tax at a lower rate that the system might need to be tweaked eventually.
Eventually may turn out to be now. Increasingly, there have been numerous calls for changes in Russia’s tax system as expenses in the country are on the way up. Russia’s Finance Minister Anton Siluanov suggested increases as recently as last week that would “equalize the taxation of revenues from dividends and wages.” Last year, Russian Deputy Prime Minister Arkady Dvorkovich suggested an increase in the personal income tax rate to 15% – this was a change in policy from 2012 when he advocated keeping the flat tax at 13%.
While those older proposals didn’t gather much momentum, this time things might be different. The current tax increase bill, which is being drafted by a group of members of parliament, will be introduced in the fall where Krutov expects it will meet with support.
