Hoover Daily Report

Russia Abolishes Inheritance Tax

via russianeconomy.org
Monday, June 20, 2005

Since July 26, 2000, numerous articles posted to this web site have chronicled Russia's adoption of the flat tax, its annual results, and other tax-rate reductions for corporations and small business.

A comprehensive flat tax, which strives to tax income only once, would exclude inheritance from taxation on the ground that inherited money was taxed at the time of its earning and that taxing bequests amounts to double taxation.

In April Russia's President Vladimir Putin called for an end to inheritance tax. On June 15, 2005, Russia eliminated this source of double taxation. The State Duma, the lower house of the Russian parliament, by an overwhelming vote of 414 to 2 passed the draft law abolishing inheritance tax in the third reading required for passage. It eliminated current taxation of estates at rates ranging from 5–40%.

The law, which takes effect January 1, 2006, also abolishes gift tax to close relatives, including spouses, parents, children, grandparents, grandchildren, siblings, and step-siblings. It eliminates current taxation of gifts to close family members at rates of 3–15%, and for non-family members at 10–40%, replacing the latter with the flat rate of 13%.