Taxation of the Self-Employed in Russia: Potential Discrimination (E.V. Ryabova, V.A. Machekhin, журнал "Право. Журнал Высшей школы экономики", N 3, июль-сентябрь 2022 г.)

Ryabova E.V. Machekhin V.A. Taxation of the Self-Employed in Russia: Potential Discrimination

E.V. Ryabova - Lomonosov Moscow State University, Associate Professor

V.A. Machekhin - Lomonosov Moscow State University, Financial University under the Government of the Russian Federation, Associate Professor.

In 2018 the Russian government introduced an option for the self-employed to pay a newly designed professional income tax instead of the ordinary personal income tax. This new tax regime has been widely examined by Russian scholars; however, the potentially discriminatory nature of the tax has not been studied. The tax is based on citizenship, and the authors' principal hypothesis is that it conflicts with the fundamental principles of Russian tax law because it is not consistent with the principle of non-discrimination in Russian law. The article studies the issues arising from taxing the self-employed (i.e. the professional income tax) in a cross-border scenario and the potential for tax discrimination on grounds of nationality, tax nexus, and citizenship in taxing the self-employed in Russia. Moreover, the article raises the question of "general" tax discrimination among employees caused by the professional income tax. The authors use academic studies and judicial findings to examine the way other countries define the relationship between citizenship and taxation in order to clearly establish the discriminatory character of the professional income tax, and they conclude that the citizenship or nationality of the taxpayer is primarily a political connection rather than an economic one. The tax reflects an economic connection and should be understood as a payment for the "consumption" of public goods. In the contemporary understanding of taxation, the citizenship-based approach should be regarded as discriminatory in principle. The political ambitions of Russia in promoting integration across the EAEU cannot justify the restriction of the self-employed status only to citizens of EAEU member states. The authors recommend redesigning the professional income tax on the basis of residence and revising treaties pertaining to dual taxation in order to extend their provisions to the professional income tax.

Keywords: self-employment tax, self-employed, citizenship and taxation, professional income tax, tax discrimination.