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Tax Guide Russian Federation

Tax Guide Russian Federation

Personal Income Taxation in Russia

Russian residents are mostly liable to pay personal income tax on their aggregate income in the given financial year. Therefore, worldwide basis of taxation is used in order to calculate personal income tax in Russia. On the other hand, individuals that are non-residents in Russia are only supposed to pay taxes on income that has been sourced from within Russia.

Income from Russian based sources mostly includes income that is received from properties located within Russia, as well as dividends received, and remuneration for other activities that are performed within the periphery of Russia.

Personal Income Tax Rates in Russia

Russia mostly follows a progressive taxation regime. Under this premise, individuals that have income up to RUB (Russian Ruble) 5 Million are taxed at a rate of 13%. On the contrary, individuals that have an income threshold of more than RUB (Russian Ruble) 5 Million are taxed at a rate of 15%. However, there are certain exceptions to this particular rule, which are as follows:

  • For income that has been earned as a result of sale and receipt of property (other than securities) is subject to taxation at a flat rate of 13%.
  • Awards and prizes, or any financial remuneration received in game shows or any other events is also subject to taxation at a flat rate of 35%.

Non-residents in Russia are taxed at a flat Personal Income Taxation Rate, equivalent to 30%. This rate is levied for all types of income that are generated from Russian sources. However, the following exceptions apply:

  • Dividends from Russian companies are levied PIT at a flat rate of 15%.
  • Income from qualified professionals are taxed at a rate of 13% or 15%.
  • Income that has been derived from foreign nationals is taxed at a rate of 13% or 15%.

Corporate Income Taxation in Russia

Business entities in Russia are supposed to pay Corporate Income Taxes on income that has been earned within Russia, as well as outside Russia. However, there is a credit relief that is available in cases of a foreign tax paid.

Corporate Income Tax Rate in Russia

As per the Corporate Income Tax regime in Russia, CIT is levied at a rate of 20% for all taxpayers. Out of this 20%, 3% is allocated to the federal budget, whereas the remaining 17% is allocated to budgets across the relevant constituencies.

Foreign legal entities are also supposed to pay CIT at a rate of 20%.

Other Taxation in Russia

  • Value Added Tax (VAT): VAT is levied in Russia at a standard rate of 20%. However, reduced rates of 10% are applicable on certain good stuffs, and commodities within Russia. Additionally, some goods and services are also zero-rated when it comes to VAT. Examples include export related services, as well as basic banking and insurance related services.
  • Import VAT: Import VAT is mostly payable on the custom value of the given imported goods. This also includes the excise duties in place. Import VAT is levied at a rate of either 20% or 10%.
  • Import Duties: Import Duties are levied in Russia at progressive rates, ranging from 0% to 20%.
  • Custom Processing Fee: This is levied on all goods and services that are transported across the Russian border. This fee depends on the custom value of the transported goods.
  • Excise Duty: Excise Taxes are mostly paid by producers of excisable products on the domestic supplies. They are mostly charged on imports on product categories including tobacco, alcohol as well as oil products.
  • Property Tax: Property Tax is levied in Russia at a rate of 2.2%. This is the maximum rate of tax levied.
  • Transfer Taxes: There are no transfer taxes applicable in Russia.
  • Payroll Taxes: Payroll taxes are levied in the form of social contributions in Russia. The annual contributions are imposed as follows:
    • Contributions towards the Social Insurance Fund: The first RUB 966,000 is taxed at a rate of 2.9%.
    • Contributions towards the Pension Fund: The first RUB 1,465,000 is levied tax at a rate of 22%. Any amount over and above this is taxed at a rate of 10%.
    • Contributions towards the Medical Insurance Fund: This is levied at a rate of 5.1% on the total remuneration received by the employee.
  • Mineral Resource Extraction Tax (MRET): The rate of this tax varies from mineral type top mineral type. This mostly fluctuates within the threshold of 3.8% to 8%.
  • Environmental Levy: Environmental Fee is levied by manufacturers depending on the respective product category of goods. Highest levy is charged on products with higher carbon emissions, including consumer electronics, industrial equipment, as well as rechargeable batteries.

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