Personal income tax: tax relief and allowances.

Tax relief and a number of allowances are available to reduce an individual's tax liability, the most important allowances being:

- pensions, compensation for industrial accident or injury or other health problems, if such payments are established by law;
- income gained by the stockholder of a company as a result of increasing the value of his stock (or shares) or as a result of acquiring additional stocks (or shares) distributed by a company to its stockholders proportionally to the number of a stocks owned (value of a share);
- interest on state bonds and obligations;
- interest on money deposited in banks where it does not exceed three-quarters of the Central Bank rate for rouble accounts and 9 per cent for foreign currency accounts;
- prizes and earnings received by sportsmen from the Olympic Games and national sporting competitions.

Other allowances that should be mentioned are:

- charity payments not exceeding 25 per cent of income;
- educational expenses of a taxpayer, his spouse and his children under limitations established by the law;
- cost of a medical treatment of a taxpayer, his spouse and his children under limitations established by the law;
- revenue from the sale of houses, apartments or land which were owned for less than five years but more than three years - up to 1 million roubles (approximately $32,000); property owned less than three years - up to 125,000 roubles (approximately $4,000); also income from the sale of the such properties owned for a period of more than five years without restrictions;
- costs and expenses entailed in constructing or buying new buildings or apartments up to 2 million roubles (approximately $62,000).

If a taxpayer cannot benefit fully from these last two allowances during a given tax year, the unused portion may be carried forward to decrease his or her tax liability in a subsequent tax period.

Entrepreneurs, authors and other taxpayers acquiring income on the basis of a civil law agreement are entitled to exclude their expenses from their income tax liability.