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In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information

 

Corporate Taxes

Tax Base For Resident and Foreign Companies
Russian legal entities are taxed on their worldwide income.
Foreign legal entities which have a permanent establishment in Russia (subsidiary, branch, agency, etc.) are taxed on the income earned by this establishment in Russia. Expenses occurred abroad by this establishment can be deducted.
 

Tax Rate

Corporate tax 20% (2% payable to the central government and 18% payable to the regional government which have the power to reduce the regional element by up to 4%.)
SMEs 13%
 
Tax Rate For Foreign Companies
The taxation of an establishment belonging to a foreign legal entity is similar to that of a Russian entity.
A foreign company's income of Russian origin may be subject to deduction at source. This concerns, in particular, dividends, interest, royalties, sale of shares in a Russian company or of real estate.
Capital Gains Taxation
Long term capital gains are considered in the same way as other income and taxed at the same rate as Corporate tax, i.e. 20%.
Main Allowable Deductions and Tax Credits
All expenses (with a few exceptions) are deductible if the documents confirming these expenses, even indirectly, are provided.
Research and Development expenses are deductible up to 150% until 2 or 3 years after the end of the project.

Reduction of up to 4% of profit tax is available in certain region of Russia. Technology and software companies may also benefit from some concessions

Other Corporate Taxes
- Unified social tax: paid on all payments made to employees; the rate is progressive.
- Tax on personal property and real estate: the maximum rate is 2.2%; property ownership is exempt
 

Country Comparison For Corporate Taxation

  Russia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 7.0 28.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 177.0 260.0 175.0 207.0
Total Share of Taxes (% of Profit) 54.1 40.5 46.7 46.8

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

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Accounting Rules

 

Accounting System

Accounting Standards
In Russia, accountancy is mainly interpreted as the rules defining the way of keeping accounts books.
It is governed by the Russian accounting standards ( RAS in English), which are different from international standards.
Accounting Regulation Bodies
Ministry of Finance
Russian Central Bank
Accounting Law
Accountancy is defined in Russia by the State rather than by professional organizations.
The Russian accounting framework is defined at three levels:
- The Law on Accounting, the civil code and other laws;
- The Russian Accounting Standards ( RAS ) defined by the Ministry of Finance and the Chart of Accounts ;
- The accounting standards governing the banking and finance sectors developed by the Central Bank.
Difference Between National and International Standards (IAS/IFRS)
The Russian accounting procedures are continuing their convergence with the IFRS standards but there are still notable differences between RAS and IFRS standards.
Accounting News
EIN News
IAS Plus
 

Accounting Practices

Tax Year
From 1 January to 31 December.
Accounting Reports
Company annual accounts must be composed of:
- a balance sheet,
- a profit and loss account,
- notes.
Small companies can produce simplified accounts.
Publication Requirements
Only certain companies (insurance or joint-stock companies) are requested to publish their accounts (with an audit).
 

Accountancy Profession

Accountants
The term accountant is generally applied to those working inside the company. Outside contributors are called auditors.
Due to the importance of the State in the accounting system, accountants' associations are having difficulty getting organized. At the present time, they are trying to federate under the aegis of the Eurasian Council of Certified Accountants and Auditors (ECCAA) to organize a certification program.
Professional Accountancy Bodies
Russian institute of professional accountants
International association of accountants and auditors
CIPA , International certification program for professional accountants.
Member of the International Federation of Accountants (IFAC)
Russia is a member of the International Federation of Accountants (IFAC).
Member of Other Federation of Accountants
Member of the European Accounting Association.
Audit Bodies
Only certain companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact the Russian College of auditors.
 
 

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Consumption Taxes

Nature of the Tax
VAT : Nalog na dobalennyu stoimost (NDS)
Standard Rate
18%
No VAT for SME except for imports activities.
Reduced Tax Rate
The reduced rate of VAT in Russia is 10% and mainly concerns foodstuffs and children's clothes. A zero VAT rate is applicable (but is not limited to) to the following operations:
- export of goods to a destination outside Russia;
- transportation, loading/unloading and arranging of transportation, loading/unloading of exported goods performed by Russian organisations or Russian individual entrepreneurs;
- transportation, loading/unloading and arranging of transportation, loading/unloading of imported goods performed by Russian organisations or Russian individual entrepreneurs (except for Russian railway carriers);
- works (services) related to the transportation of goods in transit;
- some goods and services supplied to foreign diplomatic missions;
- Some financial services and medical equipment.
Exclusion From Taxation
Exports are not subject to VAT.
Imports of medical products, medicines and technological goods as well as income from medical services, sales of medicines, banking or insurance products are exempt from VAT.
Method of Calculation, Declaration and Settlement
The tax is applied to the sales price.
The declaration is made once a month unless the amount of tax is less than 2 million roubles; in that case it is made once a quarter. In general, payment must be made before the 20th of the current month.
Other Consumption Taxes
There are excise duties on many luxury goods, in particular on cars, motorbikes, alcohol and tobacco.

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Individual Taxes

Tax Base For Residents and Non-Residents
An individual who spends at least 183 days in Russia is considered as a resident.
For a Russian resident, the tax base is all income paid in Russia and abroad.
For a foreign resident, only income paid in Russia is taxable.
 

Tax Rate

Flat tax rate for residents 13%
Tax for non-residents 30%
 
Allowable Deductions and Tax Credits
The following expenses can be deducted:
- donations to recognized institutions (up to 25% of income)
- expenses relating to the education of a family member (up to a certain limit)
- for a dependent member of the family (up to a certain limit)
- contributions to a supplementary retirement scheme (up to an annual limit)
- medical expenses (up to 28 000 roubles)
- the purchase of real estate (deductions up to 1 million roubles a year)

The following income is exempt from tax: sale of living accommodation or another good owned for more than 3 years, interest earned on deposits made to Russian banks under certain conditions, grants, retirement pensions or disability benefit.
Special Expatriate Tax Regime
There is no special regime for expatriates.
Capital Tax Rate
Tax on personal property and real estate: the maximum rate for individuals is 2% (2.2% for companies); property ownership is exempt.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of treaties signed by Russia with links to texts
Withholding Taxes
Dividends: 9% (15% if paid to foreign entity or non-resident); Interest: 20% to nonresidents, Royalties: 20%. These rates may be lower in the case of a tax treaty with Russia.

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Sources of Fiscal Information

Tax Authorities
Russian federal tax service , (in Russian).
Ministry of Finance
Other Domestic Resources
Federal tax service (in Russian)
Center for deduction of R&D expenses (in Russian)
RosBusinessConsulting in English
Country Guides
Worldwide-Tax
Deloitte 2010 Doing Business in Russia Guide
Emerging Market Group
International Tax Review on Russia

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Learn more about Service Providers in Russia on Globaltrade.net, the Directory for International Trade Service Providers.

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Learn more about Taxes and Accounting in Russia on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: May 2013

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