Russian tax system brief review

Russian taxes are listed and regulated by the Russian Tax Code. The list of Russian taxes includes the following taxes (table below) and levies:

Corporate income tax 

The profits tax rate is 20%. This rate is split into two components payable to different budgets: Federal budget 2%; Regional budget 18%. The regional authorities may reduce their component of the tax rate down to 13.5%, making the lowest possible total tax rate of 15.5%. Some regions have effectively adopted a reduced tax rate for certain categories of taxpayers under certain conditions (e.g., Leningrad region, Vologda Region, Kaluga Region, Krasnoyarsk Territory, Khanty-Mansisk region, etc.). Different rates apply for specific types of income such as dividends. 

Taxable profit of Russian companies is determined as gross income earned less tax-deductible expenses incurred. Taxable profit of foreign organizations is defined as income received through a permanent establishment reduced by expenses incurred by the foreign organization in relation to the permanent establishment’s activities and certain types of income received from other sources in Russia. 

Taxable profit is normally determined on an accrual basis. 

Value-added tax (VAT) 

VAT is levied at a general rate of 18% on taxable supplies, which include the majority of domestic sales of goods and services. Certain basic food products and medical products, children goods, medicines, drugs, newspapers, and magazines are subject to a reduced rate of 10%. Exported goods and some other specified supplies (e.g., sales to diplomatic missions) are subject to VAT at a zero rate. 

The following operations are subjected to VAT: sales of goods (work, services) in the territory of Russia, transfers of goods (work, services) in the territory of Russia for own consumptions if the expenses incurred are not deductible for profits tax purposes, performance of construction and installation work for own use, and importation of goods into the customs territory of Russia. 

The transfer of ownership of goods (or the results of work or services) without consideration is regarded as a sale for VAT purposes. 

Property tax 

The tax base is the average annual value of the assets, calculated on the basis of the net book value of the fixed assets period by period (three months, six months, nine months, and calendar year).

Other specific taxes 

1. Transport tax 

Transport tax applies to both legal entities and physical persons who owns registered vehicles. Tax rates vary from RUB 5 to RUB 50 (US$0.16 to US$1.65) per horsepower of the engine capacity of the vehicle. Regional authorities are entitled to increase or decrease the tax rates, but not more than fivefold. 

2. Mineral extraction tax 

Tax rates for oil and gas represent fixed duty rates based on physical volume or quantity, but are subject to variation in line with changes in world prices. Other minerals are subject to tax based on the value of extracted commercial minerals.