- •Establishments located in the territory of Russia
- •In some cases vat amounts paid to the suppliers of goods, work, services are added to the profits tax deductible expenses (for example, if they are used for vat exempt operations).
- •Profits Tax
- •In accordance with Chapter 25 of the Tax Code of the Russian Federation there are two methods of
- •Double Tax Treaties
- •Property Tax
- •Unified Social Tax
- •Individual Income Tax
Unified Social Tax
This tax forms revenues of Federal budget and off-budget funds, such as Pension Fund, Mandatory Medical Insurance Fund, Social Insurance Fund. Currently a descending unified social tax scale is applied. Maximum rate is equal to 26% see Appendix 2).
The unified social tax is charged on all payments made to individuals, which reduce taxable profit.
Starting from 1 January 2003, wages of foreign nationals residing in the Russian Federation on a temporary basis (e.g., employees of permanent establishments of foreign companies or foreign nationals employed by Russian companies) are to be included into the unified social tax base.
Individual Income Tax
Tax residents of the Russian Federation are payers of individual income tax. Tax residents are defined as individuals who stay not less than 183 days (subsequently on in the aggregate) in Russia in a calendar year.
Currently a system of flat rates is applied for the purpose of taxation of individuals’ income. The basic rate is equal to 13 per cent.
Some types of income are subject to other tax rates. Thus, for example, income received in the form of dividends is subject to a 9 per cent rate. The tax shall be calculated, withheld and paid by the source of income.
Some specific types of income including, but not limited to, deposit interest, grants, prizes, and interest savings are subject to the individual income tax at the rate of 35 per cent.
Income obtained by non-resident individuals is subject to the rate of 30 per cent.
When determining taxable income tax residents may apply standard tax deductions, property tax deductions, social tax deductions, professional tax deductions.
Individuals, including foreign nationals, residing in the territory of the Russian Federation on a temporary basis are obliged to file tax return not later than 30 April of the year following the reporting tax year.
Moreover, foreign nationals are obliged to file tax return one month prior to intended departure from the Russian Federation provided they are not planning to come back to Russia in the same tax period.