Ministry proposed to introduce the concept of “digital resident” for foreign IT specialists

Ministry proposed to introduce the concept of “digital resident” for foreign IT specialists

The authorities will work out amendments to the legislation, so that Russian IT companies can attract specialists from other countries. Market players consider the measures necessary, but they point out that the problem with personnel cannot be solved with only that kind of steps.

Ministry proposed to introduce the concept of “digital resident” for foreign IT specialists

The Ministry of Digital Development proposed to provide tax incentives for IT companies created by “digital residents”, similar to measures to support Russian IT players, one of the market participants who is familiar with the essence of the proposals told RBC.

The “digital residency” mechanism was previously introduced in a number of countries, for example, in Estonia. It provides those adult individuals who are not citizens and do not reside in the territory of the state providing “digital residence” with the opportunity to obtain their digital identity card and use this document to register a company, when working with banks, paying taxes, exchanging legally significant messages and other remote interaction with the state.

“Digital residency” does not provide a person with a residence permit, citizenship and tax residency. In Russia, the need to create a “digital residence” system for foreign companies and individuals working in the IT sector, without the need for a physical presence in Russia, was mentioned in the so-called second package of support measures for the IT industry, which was approved on September 9: the Government instructed the Ministry of Digital Development to prepare proposals on implementation of this mechanism.

In 2021, amendments to the Tax Code came into force in Russia (it received the unofficial name of “tax maneuver in IT”) according to which the rate of insurance premiums for IT companies decreased from 14 to 7.6%, the income tax rate was lowered from 20 to 3 %. To receive benefits, an IT company must receive at least 90% of its income from software and database development; have state accreditation as an organization carrying out activities in the field of IT and it must have at least seven employees.

Why the “digital residency” is needed?

Deputy Minister of Digital Development Maxim Parshin confirmed that the ministry is working out a set of measures to create additional conditions for the relocation of foreign IT companies, including those with Russian background, to Russian jurisdiction, as well as simplify the procedure for attracting qualified IT specialists to work in Russia. “Digital residency” is an important element of these measures. On the one hand, it will allow remote registration of a legal entity, without the need for a physical presence in Russia, and opportunity to use the benefits of “tax maneuver” and additional preferences, for example, the removal of excessive restrictions on foreign exchange and export controls. On the other hand, a mechanism for simplified recruitment of foreign specialists will be created for Russian IT companies in the face of an acute staff shortage in the market,” the Deputy Minister noted.

According to the current requirements of the Labour Code, it is impossible to draw up an employment contract with a foreign IT specialist without his physical presence in the country: the employee must obtain temporary registration and draw up a number of documents that require a handwritten signature, for example, SNILS. In addition, the employer is obliged to ensure that the employee's labour protection requirements are met, which can be problematic in the case of work from another country. There are also questions about how disputes between a Russian company and an employee living abroad will be resolved.

However, the Ministry of Labour opposed the amendments to the Labour Code, said one of the sources of RBC. The Ministry of Labour generally supports the idea of ​​“digital residency”, but believes that foreign specialists should be attracted within the framework of civil law, and not labour relations, for example, on a work contract. “Labour relations by their nature imply a great responsibility of the employer to its employee, including providing the employee with the means of production, fulfilling the obligations of pension and social insurance. Such obligations cannot be fulfilled in full if the employee is abroad,” said the representative of the Ministry of Labour. In addition, labour legislation is of a country-specific and not extraterritorial nature, that is, in the event of labor disputes, the employer and the employee will not be able to resolve contradictions within the framework of labor relations.

How many IT specialists are needed?

At the beginning of this year, representatives of the Ministry of Digital Development said that the shortage of qualified IT personnel in Russia is from 500 thousand to 1 million people a year. Despite rising salaries and efforts by Russian companies to retain staff, a recent survey conducted by educational platform GeekBrains suggests that most students in the relevant disciplines want to work in other countries. Market participants, in turn, complain that with the transition of the world to remote work, many IT specialists began to work for foreign companies, physically being in Russia. The shortage of personnel in the IT field is so strong that many employers began to offer payment to good IT specialists just to come for an interview at the company, one of the market players told RBC. 

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