Russia: Tax changes in year 2016

Tax holidays for entrepreneurs 

Federal law from 29 December 2014 N 477-FZ introduced tax holidays for entrepreneurs. According to article 346.50 the Russian regions can fix the tax rate of 0 per cent for entrepreneurs registered for the first time, and doing business in the field of industrial, social and (or) scientific. 

Tax report for personal income 

Companies have to submit the tax report for personal income to Tax authority quarterly. 

Tax rate remains the same as in 2015. Generally, tax rate is 13 % for resident. To be considered a Russian resident, residence must be established of at least 183 days in Russia during any calendar tax year. Non-residents are liable to tax at flat rate of 30%, generally withheld at source. No deduction or allowances are available for non-resident. 

Individuals conducting private activities including individual entrepreneurs, individuals who received income from which Russian income tax was not withheld and other specific categories of individuals are obligated to file a tax return. The main amendment in tax return is regarding disposal of property, i.e. individuals have to own property more than 5 years, excluding situations when individuals sell property to close relatives. 

Advanced Development Zones 

Russian Federation Presidential decree was released concerning the establishment of “Advanced Development Zones, ADZ”in the country. 

The law stipulates that over the first three years, ADZ has to be set up in the Far East regions of the country, then only they can be established in other regions. At the first stage, 14 zones are planned to be established in the Far East regions.

The law foresees a lower corporate tax for ADZ residents, including a zero federal rate for five taxation periods after the first profit, and a regional rate not exceeding of 5% during the five taxation periods and no higher than 10% in the next five taxation periods. 

The mineral extraction tax in the zones will be calculated with a deduction coefficient varying from 0 to 1 during a 10-year period. 

Tax priority 

On 28 July, the Russian Ministry of Finance (MinFin) published the final version of the “Main Tax Policy Priorities for 2015 and the 2016-2017 Planning Period”. 

This clause in the document now comments on a slowdown of excise indexation on alcohol, alcohol based products and beer. It also states that it is necessary to harmonise excise rates on tobacco products with other Customs Union states, as well as increase the added-value component of the excise rate on cigarettes and other smokeable products gradually (up to 10% of the maximum retail price). This would increase the tax burden on expensive tobacco products than that on inexpensive products. 

Instead of specific alternatives for changing the rules of taxing a consolidated group of taxpayers (primarily with respect to accounting for losses of specific CGT members), the document now mentions the mere requirement of monitoring the application of this regime in order to identify systemic shortfalls when using this tool.

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