In Russia, employers are required to make social insurance contributions. These contributions fund social security benefits such as pensions, healthcare, and disability payments. The contribution rates are applied to a capped amount of the employee's annual salary.

Pension Fund (PFR)

Employers contribute 22% up to a salary base of ₽1,565,000 (~ $21,000) per year, and 10% on any amount exceeding the cap.

Social Insurance Fund (FSS)

Employers contribute 2.9% up to a salary base of ₽1,032,000 (~ $13,800) per year. No contributions are required for amounts exceeding the cap.

Medical Insurance Fund (MHI)

Employers contribute a flat rate of 5.1% of the employee's salary.

Accident Insurance (FSS)

Employers contribute a variable rate ranging from 0.2% to 8.5% depending on the occupational risk level associated with the employee's job.

Payment Deadlines

Social security contributions must be paid monthly, by the 15th day of the following month.

Personal Income Tax (PIT)

While not technically an employer tax, employers are required to withhold a flat personal income tax rate of 13% on their annual income up to ₽5 million (~ $67,500) from employee salaries and remit it to the tax authorities. Income tax withheld from salaries must be transferred to the tax authorities by the day of salary payment.

Important Notes

For the most current contribution rates and specific deadlines, refer to the official Russian tax authority website.

All Russian tax residents automatically qualify for a standard deduction that reduces their taxable income base. The standard deduction amount is fixed by the government and may change periodically.

Social and Medical Expenses

Taxpayers can deduct documented expenses for medical treatment for themselves, spouses, and dependents, contributions to private pension plans, and education costs for themselves and dependent children. Deductions for these expenses are capped at a specific percentage of the taxpayer's taxable income. Receipts, invoices, and other relevant documents proving the expenses are necessary for claiming deductions.

Property Tax and Interest Deductions

Taxpayers can deduct documented property taxes paid on their primary residence. Interest payments on a mortgage loan for a taxpayer's primary residence qualify for deduction. Similar to social and medical expenses, deductions for property tax and mortgage interest have established caps.

Important Notes

Employees need to file an annual tax return to claim most deductions. Exceptions exist for standard deductions automatically applied by employers. Proper documentation is crucial for claiming deductions. Ensure you have receipts, invoices, and other relevant proof of expenses.

In Russia, the standard VAT rate is currently 20%. This applies to most goods and services unless they qualify for a reduced rate or are VAT-exempt. A reduced VAT rate of 10% applies to specific services, including public transportation services, medical and veterinary services, educational services, hotel accommodation services, and cultural and entertainment services.

VAT Exemptions for Services

Certain services in Russia are exempt from VAT. These include financial services like banking and insurance, educational services provided by state-funded institutions, medical services provided by state-funded healthcare institutions, and social services. It's important to note that the list of VAT exemptions can be subject to change.

VAT Filing Procedures

Businesses exceeding a specific annual turnover threshold must register for VAT in Russia. VAT-registered businesses must file periodic VAT returns electronically. The filing frequency (quarterly or monthly) depends on the business's turnover. VAT payments are generally due by the 25th day of the following month after the return filing period.

Additional Considerations for Service Providers

Determining the place of supply for services is crucial for VAT purposes. Foreign companies supplying electronic services to Russian customers might have specific VAT registration and reporting requirements.

Federal legislation allows regional authorities to offer lower profit tax rates. This can bring the rate down to 15.5% from the standard 20%. Some regions might even offer a temporary 0% rate under special circumstances.

Reduced Profit Tax Rate in Specific Regions

Businesses operating in designated Special Economic Zones (SEZs) can benefit from significant tax breaks, including a reduced profit tax rate (as low as 5%), and lower property tax rates.

Special Economic Zones (SEZs)

The specific requirements for availing of these profit tax breaks vary depending on the incentive program. Generally, you'll need to meet certain criteria related to your industry, investment level, job creation, and location. Each region or SEZ will have its application process. It's advisable to consult with a tax advisor familiar with Russian tax regulations to determine your eligibility and guide you through the application process.

Qualification Criteria and Application Process for Profit Tax Breaks

Businesses can claim a tax credit for a portion of the costs incurred in acquiring new fixed assets. The credit amount can be used to reduce your profit tax liability.

Investment Tax Credit

To qualify for the investment tax credit, the new fixed assets must meet specific criteria, such as being included in a special registry maintained by the Russian government. The application process typically involves submitting relevant documentation to the tax authorities.

Qualification Criteria and Application Process for Investment Tax Credit

Russia offers various other tax incentives, including a simplified tax regime offering a lower tax burden for small businesses meeting specific criteria, tax breaks for businesses engaged in Research and Development (R&D) activities, and exemption from import duties for certain equipment and technology imports under specific circumstances.

Other Tax Incentives

• Patent Tax System for Small Businesses
• Tax Breaks for Research and Development (R&D)
• Exemption from Import Duties