Consumption taxes

Nature of the tax

VAT : Nalog na dobalennyu stoimost (NDS)

Tax rate

18%
No VAT for SME except for imports activities.

Reduced tax rate

The reduced rate of VAT in Russia is 10% and mainly concerns foodstuffs and children's clothes. A zero VAT rate is applicable (but is not limited to) to the following operations:
- export of goods to a destination outside Russia;
- transportation, loading/unloading and arranging of transportation, loading/unloading of exported goods performed by Russian organisations or Russian individual entrepreneurs;
- transportation, loading/unloading and arranging of transportation, loading/unloading of imported goods performed by Russian organisations or Russian individual entrepreneurs (except for Russian railway carriers);
- works (services) related to the transportation of goods in transit;
- some goods and services supplied to foreign diplomatic missions.

Other consumption taxes

There are excise duties on many luxury goods, in particular on cars, motorbikes, alcohol and tobacco.

Corporate taxes

Tax rate

Tax rate for foreign companies

Russian legal entities are taxed on their worldwide income.
Foreign legal entities which have a permanent establishment in Russia (subsidiary, branch, agency, etc.) are taxed on the income earned by this establishment in Russia. Expenses occurred abroad by this establishment can be deducted.

Capital gains taxation

Long term capital gains are considered in the same way as other income and taxed at the same rate as Corporate tax, i.e. 20%.

Main allowable deductions and tax credit

All expenses (with a few exceptions) are deductible if the documents confirming these expenses, even indirectly, are provided.
Research and Development expenses are deductible up to 100% until 2 or 3 years after the end of the project.

Reduction of up to 4% of profit tax is availble in certain region of Russia. Technology and software companies may also benefit from some concesions

Other corporate taxes

- Unified social tax: paid on all payments made to employees; the rate is progressive.
- Tax on personal property and real estate: the maximum rate is 2.2%; property ownership is exempt.

For additional information access the 2009 Danske Bank guide on Doing Business in Russia.

Individual taxes

Tax rate

Allowable deductions and tax credit

The following expenses can be deducted:
- donations to recognized institutions (up to 25% of income)
- expenses relating to the education of a family member (up to a certain limit)
- for a dependent member of the family (up to a certain limit)
- contributions to a supplementary retirement scheme (up to an annual limit)
- medical expenses (up to 28 000 roubles)
- the purchase of real estate (deductions up to 1 million roubles a year)

The following income is exempt from tax: sale of living accommodation or another good owned for more than 3 years, interest earned on deposits made to Russian banks under certain conditions, grants, retirement pensions or disability benefit.

Special expatriate tax regime

There is no special regime for expatriates.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

List of treaties signed by Russia with links to texts

Withholding taxes

Dividends: 9% (15% if paid to foreign entity or non-resident); Interest: 20% to nonresidents, Royalties: 20%. These rates may be lower in the case of a tax treaty with Russia.

Bilateral agreement

Russia and Tunisia are bound by a double taxation treaty: no

Sources of fiscal information

Tax Authorities

Russian federal tax service

Other domestic resources

Federal tax service (in Russian)
Center for deduction of R&D expenses (in Russian)
RosBusinessConsulting in English