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General information
Personal income tax in Russia has a quite low flat rate and doesn’t depend of income amount. This makes Russia as a good working place for highly-qualified specialists. Russian tax residents and non-residents are taxed differently in Russia. An individual will be considered as a Russian tax resident if he/she is physically present in Russia for 183 days or more during a period of 12 consecutive months preceding the specific date. Final tax liabilities for a reporting calendar year are determined based on a tax residence status for that year. In particular, if an individual spent at least 183 calendar days in Russia in the reporting year, he/she is considered as a tax resident with regard to the entire reporting year. Absences from Russia due to ill health or study abroad less than 6 months, will be counted as staying in Russia. . Both days of arrival and departure should be taken into account for calculation of day of presence in Russia
Tax rates
Detailed tax rates residents and non-residents income tabled as below.
Non-taxable income
Following types of income are non-taxable:
• reimbursement of employees’business trips expenses within certain limits, provided these expenses are properly documented in accordance with Russian legislation.
• fees paid by an employer in Russia from its aftertax-profits on medical treatment for employees, their spouses, parents, and children in licensed medical centers.
• state pensions awarded in accordance with the statutory procedure established by Russian law.
• certain state benefits (such as unemployment allowance, maternity allowance within certain limits, etc.) payable in accordance with Russian law.
• compensation of injuries paid in accordance with Russian legislation.
• contributions of organizations under private medical insurance contracts in favour of individuals.
• employer contributions to properly licensed Russian non-state pension funds.
• fees paid by an organization for education of an individual (e.g., child education) in licensed educational organizations.
Income of diplomats, consuls, administrative and support staff, as well as their family members who do not hold a permanent residency permit and are not the members of international organizations, will be exempted from Russian tax, unless the income relates to an activity other than their duties.
Deductions from income
There are 3 general types of deductions: standard deductions, social deductions and property-related deductions.
Standard deductions apply if an individual have one or more children. Deduction of RUB 1,400 per month for first and second child and RUB3,000 per month for third and each next child.
Social deductions apply if an individual have spent a part of his/her income for some kind of social expenses, such as medical treatment, education or donations to charitable organizations. For example, qualified medical expenses, cost of medical insurance, pension contributions and tuition fees own education – up to RUB120,000 per year.
Property related deductions apply up to RUB2,000,000 (approx.. 57’000 USD) of expenses on the construction or purchase in Russia of a residential houses, apartments, rooms and land plots for residential construction and up to RUB3,000,000 (approx.. 86’000 USD) of interest paid on loans used for such construction or purchase.
Withholding
Tax agents which pay income (exceptions apply to some types of income) to individuals are required to withhold income tax and remit it to the Russian finance authorities. Tax agents include individual entrepreneurs, Russian legal entities, and Representative offices/Branches of foreign legal entities registered in Russia. Individuals who receive remuneration from outside Russia are personally responsible for income tax compliance and pay tax from such income on a self assessment basis.
