Russian Tax System

In general, taxes levied at all levels are regulated by the Tax Code, which sets out the structure of each tax (e.g. taxpayer, tax base, maximum tax rates, tax exemptions, administrative matters). The Russian regions are authorized to set their own rates within the framework provided by the Tax Code. 

 

Laws

The Tax Code often refers to other legislation composed of other Codes and hundreds of subordinate laws and regulations.

  

Tax Law Interpretations

Interpretations of the law by the Ministry of Finance and the Federal Tax Service or the tax authorities are not binding on the taxpayer or on the courts, although the tax authorities must follow such interpretations. Generally, court decisions on tax cases, including the decisions of the Supreme Arbitration Court, do not establish a binding precedent. However, the information letters on recent judicial practice issued by the Supreme Arbitration Court and the Supreme Court are binding on lower courts. The Constitutional Court’s decisions on the constitutionality of particular legislation establish a binding precedent.

 

Generally, court decisions on tax cases, including the decisions of the Supreme Arbitration Court, do not establish a binding precedent. However, the information letters on recent judicial practice issued by the Supreme Arbitration Court and the Supreme Court are binding on lower courts. The Constitutional Court’s decisions on the constitutionality of particular legislation establish a binding precedent.

 

Taxes

 

Russian taxes on usual corporation may be grouped as follows:

1. Income taxes Corporate Income tax

2. Indirect taxes

3. Payroll taxes

4. Property Taxes

5. Other Taxees

 

1. Income taxes Corporate Income tax

Income taxes Corporate Income tax is 20%.

Withholding Corporate Income tax on Russian source passive income of foreign legal entities (interest, dividend, rent, royalty and similar) – from 9% to 20%.

Withholding tax on dividends paid to Russian legal entities is 9%.

 

2. Indirect taxes

Value-Added Tax (VAT) -10% on the value of socially important goods and 18% on the value of most goods and services.

 

3. Payroll taxes

Payroll taxes are paid by employers only and comprised of contributions from cumulated gross annual income of Russian and foreign nationals citizens( except for foreign nationals working in Russia for less than 6 months or keeping Highly Qualified Specialist work permit):

 

On gross incomes up to 512 000 rubles a year:

  • Pension Fund of the Russian Federation – 22%;
  • Medical Fund of the Russian Federation – 5.1%;
  • Social Insurance Fund – 2.9%;
  • Insurance against industrial accidents and deaths in the workplace / industrial fatalities – from 0.2% to 8.5% (depending on industry).

On gross income from 512 rubles a year:

  • Pension Fund of the Russian Federation – 10%;
  • Insurance against industrial accidents and deaths in the workplace / industrial fatalities – from 0.2- 8.5% (depending on industry);
  • Total amount of contributions payable by agricultural and small business engaged in production and socially important areas of business varies from 14% to 26%.

4. Property Taxes

All property taxes are regional and the rates are established by regional authorities but cannot exceed the following limits established by the Tax Code:

  • Property tax on fixed assets – 2.2%4
  • Transport tax on owned vehicles, vessels and aircraft – tax amount depends on engine capacity and is calculated on horse-power or by a similar yardstick4
  • Land tax on owned land plots rate varies from 0.3% to 1.5% of the land book value and depends on type of plots.

Individuals are liable for:

Property tax on immovable property.

Land tax is similar to corporations.

Transport tax is similar to corporations.

Individual Income tax:

  • 13% for tax residents and 30% for non-residents;
  • 35% on interest and similar income;
  • 9% to15% on dividend income.

5. Other Taxes

Other taxes and duties are applied on specific products, activities and certain procedures carried out by notaries and governmental authorities:

  • Excises
  • Tax on Mineral Resources Extraction
  • Customs Duties
  • Water Tax
  • Duty on the use of Flora and Fauna

  • Stamp Duties

There is also special tax regimes for small, agricultural businesses and agreements on product sharing used for the extraction of mineral resources. Under small and agricultural regimes a unified tax, generally from 6% to 15% (or a fixed contribution) is paid. But certain conditions have to be satisfied in applying such regimes.

Contact information

Telephon/fax:
+7 (495) 504-12-15; +7 (495) 626-05-31

E-mail: info@hermansmith.ru

Address:
21/5 Kuznetsky most str.,
107996, Moscow, Russia