Russia Income Tax

Income Tax in Russia

Updated on Monday 08th March 2021

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Income tax in Russia.jpgThe corporate income tax or CIT applies to the worldwide incomes generated by Russian legal entities. According to the tax reviews and updates for 2021, the maximum CIT rate is set at 20%. All you need to know about the Russia income tax rate can be discussed with our Russian lawyers with experience in the taxation field. The same team can help foreign entrepreneurs register for taxation in this country.

What is the corporate income tax in Russia?

As mentioned earlier, CIT or the corporate income tax is set at 20% and it applies to the total worldwide income generated by Russian legal entities, as stated by the Tax Law in Russia. According to the same set of laws, a 3% rate of CIT is distributed to the federal budget in Russia, while the rest of the 17% rate is directed to different regional budgets, between 2017 and 2024. Companies with permanent establishments in Russia must pay the 20% CIT on Russia-source income, plus the withholding tax that ranges from 10% to 20% rates.

The taxation on personal income in Russia

PIT is the personal income tax in Russia, and it is applicable to the total worldwide income in a year. Foreigners with incomes in Russia are levied on the incomes generated in this country, yet some tax exemptions might apply in accordance with the tax treaties signed by Russia. PIT applies to dividends received from legal entities in Russia, properties in Russia, and other activities developed in the country. Here are important details about PIT in Russia:
  1. Annual incomes of up to RUB 5 million are subject to a 13% tax rate.
  2. Annual incomes of more than RUB 5 million are subject to a 15% tax rate.
  3. A flat rate of 13% applies to property sales, pension, and insurance payments.
  4. A flat PIT rate of 30% applies to non-residents in Russia for most of the incomes generated in this country, except dividends from Russian companies.
  5. Highly qualified professionals in Russia are subject to a PIT of 13% or 15% rate respectively.
Persons interested in more details about Russia income tax rate can address their inquiries to our tax advisors in Russia.

Modifications on the tax legislation in Russia

The multilateral agreements for 27 double taxation treaties have been successfully implemented in Russia in 2020, entering into force in January 2021. There are other significant changes to the Russian tax regime:
  1. The social contribution rates for small and medium companies in Russia have been reduced to nearly 15%.
  2. IT companies in Russia are subject to a reduced CIT of 3% rate and 7.6% rate for social contributions if special accreditations are obtained.
  3. Starting with 2021, there is no VAT for software and database transfers and licensing.
  4. The DTT amendments with Luxembourg and Cyprus have been ratified and will be applied in 2022.
  5. Tax exemption for 5-year ownership of shares and participation interest in Russian and foreign legal entities is available starting with January 2021.
If you need more details about Russia income tax, feel free to talk to our lawyers in Russia.

Special taxation for citizens from countries with visa-free regime 

Foreigners subject to the visa-free regime and working as home care assistance, gardeners, or having businesses based on work patents pay preferential tax at rates of 13% or 15% instead of 30%. This kind of taxation applies to citizens from countries like Belarus, Armenia, Kyrgyzstan, or nationals from Eurasian Economic Union. More about Russia income tax rate can be discussed with our Russian lawyers.

Making investments in Russia

Russia is a highly appreciated investment destination in the world and home to numerous companies established with foreign capital that enjoy the business benefits in this country. Those looking for investment advantages in Russia can discover the appealing environment that permits the fast registration of a company plus immediate development in sectors like oil & gas, tourism, agriculture, engineering, IT, energy, research, and development, in a risk-free climate. Russia is a leading oil and natural gas exporter, so investing in this field is extremely advantageous. We present you a few facts and figures that underline the business and economy of Russia:
  1. Cyprus was the main investor in Russia in 2019, with more than 30% of the total FDIs being invested in the country.
  2. Around USD 464 billion represented the total FDI of Russia in the same year.
  3. The 2020 Doing Business report ranked Russia 28th out of 190 worldwide economies in terms of ease of doing business.
Interested in more aspects of Russian income tax? You can contact our law firm in Russia and discuss further details.