State Duma abolishes inheritance tax, changes rules for gift tax payment

MOSCOW, June 15 (RIA Novosti) - The State Duma, lower house of the Russian parliament, passed the draft law abolishing the inheritance tax on Wednesday in the third reading.

In addition, close relatives - spouses, parents, children (including adopted ones), grandparents, grandchildren, brothers, sisters, stepbrothers and stepsisters - are exempt from the gift tax.

With 226 votes needed for a bill to be passed, 414 deputies said yes and two cast 'no' votes with three abstentions.

The law abolishes the gift tax for property from physical persons, except such gifts as real estate, vehicles, stock, equity and participatory interest. Thus, persons who are not close relatives to those who grant them things have to pay the real estate, vehicles, stock, equity and participatory interest gift tax totaling 13%.

The law shall come into force on January 1, 2006.

The law's explanatory notes underline that the law is being approved "pursuant to the directive by the president of the Russian Federation to implement the fundamentals of his address to the Federal Assembly [parliament] of the Russian Federation for 2006".

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