The income taxation mechanism for ruble deposits was changed on January 1, 2009. Most of the interest rates offered on ruble deposits won’t be liable to taxation any longer and the income tax would only be charged if the annual interest rate on the deposit exceeds the Bank of Russia’s refinancing rate by 5%. As for the refinancing rate, this comes to 13% at the moment, so any ruble deposit with annual interest rate of less than 18% isn’t to be taxed at all.

‘At the same time, the income taxation mechanisms for foreign currency deposits will remain the same. As for the ruble ones, the liberalized procedure means one can make an additional 1,750 RUR of profit on a 100,000-ruble deposit, for example,’ says SKB-Bank’s Deputy Chairman of the Board Oleg Demin.

Prior to these latest changes, an income tax was charged on all the ruble deposits whose interest rate was greater than the Bank of Russia’s refinancing rate: 35% was taken off the portion of the interest exceeding the refinancing rate.