The Russian authorities are considering new powers for credit organizations in the tax sphere. The Ministry of Finance of the Russian Federation will oblige banks to identify non-residents by tracking the geolocation of clients when using Internet banking. According to the Ministry of Finance's proposal, if it is established that a client primarily uses banking services from abroad, the credit institution will have to request additional information about his place of residence.
Actions of Russian banks to establish the tax residence of clients
This proposal has been included in the draft government resolution, which is under consideration. The document provides for changes to the regulations governing the actions of banks to establish the tax residence of clients. If the client refuses to provide the necessary documents, banks will be able to suspend operations on his account and even terminate the agreement unilaterally.
Read also: Turkish banks began to close accounts of Russian companies
However, the implementation of this initiative may encounter certain difficulties. The client's location determined by the smartphone is not always reliable due to the use of proxy servers or VPN. In addition, bank users can restrict access to location information in the mobile application, making monitoring by banks difficult.
Experts also note that the proposal of the Russian Ministry of Finance will require significant changes in banks’ information systems and technological algorithms. This will necessitate improvements to systems, as banks currently typically track customers' geolocation to detect fraud, but not for tax purposes.
Read also: The biggest failure in Runet “RuNet” throughout history
It should be noted that, in accordance with current legislation, an individual is considered a tax resident of the Russian Federation if he lives in the country for at least 183 days a year. Failure to notify the Russian tax authorities of a change of status may result in administrative fines.
