Russia moves to monitor peer-to-peer bank transfers for undeclared income

Russia's Finance Ministry has proposed an amendment that would require the country's Central Bank to pass the Federal Tax Service information on individuals whose account activity suggests they regularly receive income from other private persons, Interfax reported. The change was submitted ahead of the second reading of a bill in the budget package, and the relevant State Duma committee intends to review it on November 15.

How the mechanism would work

Under the proposal, the Bank of Russia would analyze transactions in individuals' accounts and, if it spotted such signs, forward the details to the tax service. The tax authority could then ask banks for statements on those accounts. The criteria for what counts as regularly receiving income from other individuals, along with the format and frequency of the Central Bank's reports, would be set separately.

At present, tax inspectors can request bank statements for individuals who are not registered as sole proprietors only if a decision to collect a tax debt has been issued or if a tax audit approved by a higher tax authority is underway. The Finance Ministry's amendment would add a new ground for such requests: information supplied by the Central Bank.

Earlier plans

In March, the newspaper Vedomosti reported that the ministry was preparing amendments to tighten oversight of transfers between individuals. According to the plan described then, the tax service would obtain data from banks on account openings and closures, bank cards and income categories, and hand it to the Central Bank, which would compare it with transaction activity to detect anomalies.

The Finance Ministry argues the change is necessary because transfers between individuals are often treated as gifts and are not taxed, even though some may actually be payments for real transactions, such as services or apartment rentals.