Corporate Tax in Russia

Overview by
Tax Base For Resident and 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.

Tax Rate

Federal tax 6.5%
Regional tax 17.5% (with a possible reduction of 4%)
SMEs can choose to adopt a "simplified tax system". It takes the place of Profits tax, Income tax, VAT and Capital tax. 6% of profits or 15% of profits less expenses
Tax Rate For Foreign Companies
The taxation of an establishment belonging to a foreign legal entity is similar to that of a Russian entity.
A foreign company's income of Russian origin may be subject to deduction at source. This concerns, in particular, dividends, interest, royalties, sale of shares in a Russian company or of real estate.
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.


Country Comparison For Corporate Taxation

  Russia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 11.0 41.7 11.0 16.0
Time Taken For Administrative Formalities (Hours) 320.0 313.9 187.0 215.0
Total Share of Taxes (% of Profit) 46.5 41.2 46.8 48.2

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

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