52. Price structure and its components. Factors of a price.

53. Methods of pricing.

54. Pricing strategies.

55. Profit taxation in Russia.

Taxable profit is defined as revenue (excluding VAT) minus allowable expenses plus incomes from non-business transactions reduced by the amount of losses on these transactions.

Tax payers of the profits tax are:

1. Russian legal entities (i. e., legal entities formed under legislation of Russia );

2. Foreign legal entities (i.e., legal entities formed under legislation of foreign countries) that have a ‘permanent establishment’ in Russia; and

3. Foreign legal entities that do not have a permanent establishment in Russia

Taxpayers having branches and other divisions located separately pay taxes at the territory where they are registered as legal entities:

• According to general order set for legal entity if the division located separately has a balance sheet and/or settlement account

• According to special order if the division located separately does not have a balance sheet and/ or settlement account

Object of Taxation

The object of taxation is defined as profits earned by the taxpayer. Taxable profits will now include any income received by the taxpayer less the amount of the deductible expenses. Therefore, any economic benefit (income) earned by a taxpayer, including monetary and inkind benefits, will be subject to the profits tax.

Tax Rate

The profits tax rate is established at 24 %

14,5 % of which is payable to the regional budget

7,5% of which is payable to the federal budget

2,0% of which is payable to the local budgets

Income earned from participation in other companies will be taxed at the rate of:

6% for dividends received by residents from Russian companies

15% for dividends paid/received by Russian companies to/from a foreign company

Taxable income

dividends are excluded from the tax base for tax on profit but are subject to withholding tax at the reduced rate of 15 %

Interest on loans and securities is not excluded from tax base

Except for interest on governmental securities, which is subject to withholding tax at the rate of 15%

Realized capital gains are subject to tax on profit

Revenues received both in foreign currency and rubles are subject to taxation and are taxed as a whole

Exchange gains are subject to tax on profit

Profit from joint activity, received by each participant, is taxed quarterly regardless actual allocation of the profit between the participants. Losses from joint activity do not reduce the tax base.

Profit derived abroad is included into the aggregate taxable amount of profit (taxes paid abroad are offset within limits of the amount of tax to be paid in Russia) Deductible expenses

Expenses directly related to production, to servicing and support of the process of production

Expenses related to use of natural resources

Current expenses on environment protection

Payments, interest on credits and loans

Taxes and charges

Administration expenses

Material expenses (excluding the cost of returnable waste)

Payroll expenses

Depreciation of fixed assets