Russian Tax Official Creates Confusion Over Expat Social Tax Contributions

by Tatiana Smolenskaya, Tax-News.com, Moscow

20 January 2003

Nadezhda Shelemekh, the head of the Russian Tax Ministry's Unified Social Tax Department has caused confusion amongst the country's tax experts by suggesting that expatriate workers are likely to reap the benefits of the uniform social levy, which their employers were obliged to pay on their behalf from January 1.

The unified social tax payments are split between state pensions, compulsory medical insurance and the social insurance fund. According to a Moscow Times report, speaking on Thursday, Ms Shelemekh announced that there are a number of situations in which expatriate workers in Russia could receive state pensions, although she did not elaborate on exactly what these were.

However, speaking to the Moscow Post, Ernst & Young tax partner, Peter Reinhardt explained that under current pension laws in Russia, only foreigners with permanent residency permits are entitled to receive pensions.

He went on to observe that even if it were the case that expats could receive a Russian state pension as a matter of course, it is unlikely that there would be many takers:

'Expats would benefit from a Russian pension only if they're coming from a country with a less generous pension system than Russia, and there are few such countries,' he observed.

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