Russia plans to require foreign IT companies to open local offices and pay taxes

The Russian government plans to create a “digital residency” system for foreign IT companies. According to this initiative, Russia will adopt legislation by the end of 2021 that will oblige foreign companies with a client base of more than 100,000–500,000 Russian users to register legal entities in the country and pay taxes.

Foreign nationals will be able to register remotely through a personal account with the Federal Tax Service, or by creating representative offices or subsidiaries jointly with Russian companies. Companies that refuse to register may face sanctions, though the specifics of the penalties have yet to be disclosed.

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