Taxes Go Up for Families Earning Less Than $100,000.00

When exercise taxes in Russia employ to worldwide income? Find out this and more with our guide to the Russian tax organisation, looking at income and corporate tax rates.

The Russian word for tax is налог (nalog) and the current tax arrangement is based on a code enacted and adopted in three stages, from 1998 to 2003. Every bit of 2019, taxes in Russian federation account for around ten.ix% of the state'due south Gdp post-obit a series of reforms over the previous decade.

For expats, the starting signal for determining your taxation position depends on your residency status. As such, this status affects what elements of your income are bailiwick to tax and how much you pay.

Read on for an overview of the tax organization in Russia, with sections including:

The tax arrangement in Russia
Federal, regional and local taxes in Russia
Taxes on goods and services in Russia
Who pays taxes in Russia?
The Russian taxation arrangement and foreign pensions
Income tax rates in Russia
Tax deductions in Russia
How to file your income tax return in Russian federation
Property and wealth taxes in Russia
Inheritance and gift taxation in Russian federation
Corporate revenue enhancement in Russia
Import and export taxes in Russia
Tax advice in Russia
Useful resources

The tax system in Russian federation

In Russia, the Ministry building of Finance governs the country's tax dominance (Federal Taxation Service of Russia), which manages taxes.

The Russian tax year runs from one Jan to 31 December. You should submit tax returns to the Federal Revenue enhancement Service using a form called Tax Declaration (Налоговая Декларация, Nalogovaya Deklaratsiya). Returns must arrive by 30 April, and the terminal appointment to pay your taxes in Russia is fifteen July.

The Federal Tax Service'southward website provides some information in English, though more information is available in Russian.

In 2021, Russian federation implemented a progressive taxation with rates of 13% or 15% for those earning over v million rubles per year. Non-residents pay 13%, 15%, or xxx%, depending on their employment status and the source of their income.

Overall, in recent years, taxpayers have benefited from streamlined procedures and more favorable taxation rates in Russia with a smaller revenue enhancement burden. In particular, collection rates doubled since 2011 thank you to better collection processes and closer tax monitoring at the highest levels, particularly for business. It is probable that these will expand to cover a greater number of businesses – and eventually, consumers – over fourth dimension.

Fines and penalties

For the nigh part, failure to file a revenue enhancement declaration tin event in the following sanctions:

If taxes are filed less than 180 days late, v% of the tax owed is charged for each full or fractional month that the declaration is late. This fine may not full 30% of the total sum of taxes due, or the minimum amount set annually.
If the announcement is more 180 days tardily, xxx% of the taxation owed is charged, plus 10% for each full or fractional month later on the kickoff 180 days.

Federal, regional, and local taxes in Russian federation

Russia's Revenue enhancement Code determines iii levels of taxation: federal, regional, and local. Currently, federal taxes include VAT, mineral extraction revenue enhancement, individual income tax, unified social tax, corporate profits tax, excise taxes, special tax regimes, and several other taxes.

On the other manus, regional and local taxes in Russia focus on avails. Regional taxes include corporate property tax, vehicle revenue enhancement, and gambling tax, while local taxes incorporate land tax and private property tax.

Taxes on goods and services (VAT) in Russian federation

Since 2019, VAT has been levied at the criterion rate of twenty% when purchasing goods and services. There is a lowered VAT in Russian federation on sure things such as food, shoes, some medical items, and children's apparel. This is ten%. On other necessary items, including education, medical items, public housing, and traditional fiscal products, null Russian VAT applies. Russian VAT also applies to imports but not typically exports, and goods always include the VAT in the cost.

Can y'all get a refund on VAT?

Foreigners must pay VAT in Russian on all purchases. This is not possible if y'all live in Russia, but information technology is an option for visitors. To be eligible, you must agree a passport issued by a foreign land outside the Eurasian Economic Marriage (EEU – Armenia, Republic of belarus, Republic of kazakhstan, Kyrgyzstan, and Russia) and shop at selected retailers officially communicated by the Ministry building of Industry and Trade (Министерство промышленности и торговли Российской Федерации, too known every bit Минпромторг, Minpromtorg).

The minimum buy amount is 10,000 p. per retailer per twenty-four hour period at a differential refund rate as follows:

Upwards to 20% on a wide variety of goods including fashion, technology, watches, and jewelry
Up to 10% on other appurtenances including food, medicine, and books

You lot'll need to ask the store for a VAT cheque or refund class. A community officer must and then postage this at the airdrome or port you depart through. The officer will ask to see your ticket, buy receipts, and may want to inspect the goods you've bought. These should ideally take their original tags or labels intact.

You can take your validated form to a VAT refund office or agency to get your money. Refunds come either in cash or via a refund to your credit card. Several agencies have the potency to refund VAT taxes in Russia, including Premier Tax Gratuitous, Global Blueish, National Operator Taxation-Free, and Hi Sky.

If you're leaving Russia but traveling within the EEU, you won't be able to claim a refund.

Who pays taxes in Russian federation?

Whatever foreigner who receives an income from a Russian source has to pay personal income taxes in Russia. If yous live in the land for more than 183 days per year and have been granted a legal Russian residency let, your tax liabilities are lower than those of not-residents.

Individual businesses such equally freelancers, contractors, and consultants pay personal income taxation on their business concern income whether it arises from a Russian source or from overseas.

International corporate organizations have to pay tax at a flat rate of 20% on profits plus withholding tax.

When do Russian taxes apply?

Any taxation resident of the Russian Federation, fifty-fifty if they only receive income from exterior Russian federation, must pay Russian tax on that income. Withal, if an individual is non-resident or changes their tax status to non-resident during the tax yr and remains so until the finish of the tax period, they practise not have to file a declaration and no taxes are due apropos income received outside Russia, even income received prior to obtaining not-resident status.

Russian taxes can employ in the following situations:

Registered individuals, such equally freelancers and self-employed workers in Russia, who conduct business concern without forming a split legal entity.
Notaries and lawyers in private practices must pay Russian revenue enhancement on any income received for these activities.
Individuals who have received remuneration through civil contracts with other individuals who are non tax agents must declare that income. This includes income from contracts for rental or leasing agreements.
Those who have sold a private belongings must declare that income.
Workers who have received income without a tax agent, such every bit an employer withholding advisable taxes, must declare the value of this income.
All lottery winnings, or winnings from any other games of chance, must exist declared, no thing the amount.
Income earned from ownership of intellectual holding rights must be declared.
Finally, individuals who have received gifts from private individuals who are not family members must declare their inheritance.

Double taxation and treaties

Expats residents in Russia tin claim a foreign tax credit confronting their Russian tax liabilities if they are covered by a relevant Double Taxation Treaty (DTT). Russia has signed DTTs with more than 80 countries. The credit may non exceed the amount of tax payable in Russia.

In order to claim the tax credit, individuals will need to provide supporting documentation along with the revenue enhancement proclamation inside three years afterward the reporting period.

In 2018, Russia became i of over 100 countries to implement the Automatic Exchange of Data (AEOI) system, which allows the country's government to seek information on any banking concern account held anywhere by any Russian citizen or any holder of a Russian residency let.

The aim of the AEOI and the related Common Reporting Standard (CRS) is to find and reduce or eliminate the number of people who utilise secretive offshore taxation avoidance schemes and who fail to declare strange income or gains in promise that the relevant revenue enhancement authorities simply will not find out. As such, banking company account information is automatically shared beyond countries.

In most cases, financial institutions located in countries where the CRS and AEOI are in place must inform their account holders that they volition share information with the relevant authorities.

Russian revenue enhancement system and foreign pensions

Russian federation does not provide for special exemptions for foreign alimony income. Therefore, revenue enhancement residents are liable to pay Russian income tax on their foreign pension, although non-residents do non do so, even if the coin is remitted to Russia.

Since at that place are no wealth and net worth taxes in Russia, no tax applies in cases where someone inherits a strange pension or receives it by transfer. The Russian tax resident heir, however, would be subject to tax regarding income from a foreign pension scheme and potential profits of the pension vehicle.

Russia does not provide revenue enhancement relief for residents on contributions to a foreign pension scheme.

Income tax rates in Russian federation

Equally of January 2021, tax residents pay a thirteen% tax rate on an annual income of upwards to 5 million p. Income in a higher place this limit is bailiwick to xv% taxes. Meanwhile, Russian-sourced income is taxed at 30% for non-residents. Self-employed persons pay iv-6% on turnover. It is not possible to file articulation returns when paying taxes in Russia.

Tax rates for Russian residents

Those who hold official residency in Russia pay xiii% or fifteen% in income tax on their salary, dividend income, rental income from belongings, foreign exchange gains, and gains from exercising stock options. From January 2021, both residents and not-residents pay xiii% income revenue enhancement on involvement accrued on deposits exceeding ane 1000000 p., multiplied by the Banking company of Russia key rate. For example, in 2021, the amount of non-taxable interest is 42,500 p.

If you are employed, the company you work for is responsible for registering your taxable income with the Russian taxation government and deducting tax from your salary. Expats who receive some of their income in benefits pay tax based on the marketplace value of the benefit as a rule.

Tax rates for non-residents in Russia

Basically, anyone who spends less than 182 days a year in Russia is a not-resident and must pay personal income taxes at the full general flat rate of 30% on income generated within the Federation. Such Russian source income includes remuneration for activities and services performed in Russia regardless of the location of the paying entity, remuneration of directors of Russian companies, interest, and income from property located in Russia. Dividend income from Russian companies is taxed at fifteen%.

Non-residents will be taxed in Russian federation at a charge per unit of thirty% for the outset 183 days, even if you lot are on a 12-month contract. If you receive official residency or stay longer than 183 days, you can reduce your revenue enhancement liability to the progressive Russian tax rate and recoup any over-payment in the interim period.

Some foreign non-residents may be eligible for the Russian progressive tax rate. This applies to nationals of EEU member countries working in Russia. The 13% or xv% rate as well applies to nationals of other countries who are Highly Qualified Specialists. They typically accept work experience, skills, or accomplishments in a specific field and receive a monthly bacon of at to the lowest degree 167,000 p. (with certain exceptions).

Russian income tax deductions

Official residents tin reduce their Russian income tax bills via deductions and allowances. These are typically non available to not-residents. Therefore, deductions but apply to earnings subject to the progressive Russian tax rate. They are not applicable to taxes yous pay at any other charge per unit. Y'all tin file declarations for tax deductions at any fourth dimension throughout the twelvemonth.

Some examples of when deductible expenses are available include buying property in Russia, paying tuition fees, medical treatment, or making payments to charity.

The chief deduction from income taxes in Russia applies to children. The exemption starts from one,400 p. for the offset 2 children and goes upwards to 3,000 p. for a third and each subsequent child. It does non matter where the children live when applying for this taxation deduction. Nonetheless, to authorize for a deduction of kid tax, you must be earning a cumulative annual income of less than 350,000 p.

Individuals may also deduct the costs of their own pedagogy in licensed institutions (within limits) and for their children's education (up to fifty,000 p. per child).

Donations to certain non-commercial organizations (from 2012) and charities are deductible from taxable income (within the limit of 25% of all income subject to xiii/15% taxation charge per unit).

When buying property in Russia, foreign revenue enhancement residents can apply for a once-in-a-lifetime revenue enhancement deduction of up to ii,000,000 p. plus the corporeality of involvement of up to 3,000,000 p.

How to file your income tax render in Russia

At that place are several means to file a tax return in Russian federation. The easiest method is online, although there are also options to pay personally at the Russian taxation office or through a Russian depository financial institution business relationship. Y'all tin can also utilise an authorized visitor and pay an administration fee.

Sign of the Federal Tax Service of Russia

You should keep copies of the payment documents and any other tax-related documents for upward to iv years. Likewise, afterward submitting a tax declaration, the taxpayer tin can contact the Russian tax dominance to check if in that location are boosted taxes, fees, or fines owed.

You may be required to attach the following documents to your Russian tax announcement:

Copy of your passport
Employer document for employee income received outside the RF, which must betoken the specific date of each payment
A notarized power of attorney if an individual is submitting the declaration through a legally authorized representative
All support documentation for deductions, if claimed

You lot can file accounting documentation and tax returns online, at a taxation function or via authorized operators. But high-earning taxpayers are able to electronically file tax returns directly to the taxation authorization via special software. This is not available for apply by the full general public or pocket-sized to medium-sized businesses.

According to Russian tax laws, relevant documents for the calculation and payment of taxes should be kept for at least four years.

Self-employed income tax rates in Russia

About 4 meg people in Russia are self-employed, and many of these do not register equally entrepreneurs. You will notwithstanding demand to pay the progressive income tax charge per unit at thirteen% or fifteen%. Foreigners with a temporary or a permanent residence permit are eligible to register as an individual entrepreneur (индивидуальный предприниматель) or IP (ИП), in which case different tax rates utilise.

As of 2019, a new experimental revenue enhancement authorities applies to the iv regions of Moscow, Kaluga Oblast, and the Republic of Tatarstan. Subject to certain weather, individuals and individual entrepreneurs may switch to this special revenue enhancement regime and pay tax on professional income from some contained services at a charge per unit of iv% or 6% irrespective of their revenue enhancement residence status in Russia. Since Jan 2020, this new regime has been operational in a farther nineteen Russian regions.

Such IPs pay between four–vi% on their turnover as income taxes in Russia. The former charge per unit applies when providing services to individual individuals, while the college charge per unit is for companies. These rates only apply to entrepreneurs who earn less than 2.4 1000000 p. per year, above which the 13% charge per unit comes into force.

Belongings and wealth taxes in Russia

Russians and strange nationals akin do not need to pay taxes when ownership real manor or other assets. A strange national tin purchase an apartment, a country house, a garage, and even country (for private housing or private subsidiary farming) except in border areas, regions with special regimes, forests, nature reserves, and closed authoritative areas.

Internet wealth and net worth taxes are not levied in Russia.

Russian belongings revenue enhancement

Russian property tax is paid by the owners at a maximum rate of 2% of the value of the holding, depending on the value of the property as determined on 1 January:

Lower than 300,000 p: 0.1%
300,000–500,000 p: 0.1 to 0.three%
500,000 p+: 0.3% to 2%

In general, you pay Russian property tax annually as role of your revenue enhancement return application. You tin can find more data on Russian property revenue enhancement at the Russian tax authority.

However, there is a slight difference when it comes to land tax rates in Russia. Any owner of country and the property located on it pays the Russian taxation rate gear up by local government. This rate is generally 0.3% of the land value regardless of whether the land is for housing or agricultural purposes. For land uses other than agronomical, residential, or utilities infrastructure, a taxation rate of 1.v% tin can apply. The payment process is like to that for belongings revenue enhancement.

Taxes in Russian federation on rental income

Rental income gained by residents is taxed at the progressive rate, while not-residents are subject area to a tax charge per unit of 30%, which is typically withheld at the source. If such rental income is received past an international legal entity that does not have a permanent organization in Russian federation, such an entity is also subject to holding income tax on gross rentals at thirty%.

Russian capital gains tax

There is no divide capital gains taxation in Russia. Instead, gains from the disposal of property and assets are subject to income tax at the progressive rate.

Taxation residents are eligible for a statutory exemption on all property sold during a calendar year. The exemption is limited to 1 million p. in the case of real estate and 250,000 p. for other property. Proceeds from the sale of real manor are excluded from taxation for both residents and not-residents if the property is endemic for more than than five years (with certain exceptions). From 2021, income from the sale of shares in Russian and foreign companies after 5 years of continuous ownership is exempt from tax.

Capital profits for not-residents in Russia are taxed at a flat charge per unit of 20%. Taxable profits are the gross income or selling price without prior subtractions for purchase costs or other expenses.

Inheritance and gift tax rates in Russian federation

As of Jan 2006, there is no inheritance or gift tax in Russia. In case of death, heirs do not have to pay personal income tax for the deceased. Salaries attributable to resident employees must be transferred to their heirs without taxes being withheld.

However, gifts of real manor, shares, and vehicles by non-family unit members are subject to personal income taxes in Russian federation of 13% or 15%, payable by the recipient. Gifts from immediate family – spouses, parents, grandparents, children, grandchildren, siblings and one-half-siblings – are exempt.

Gifts to not-residents are taxed at 30%.

Corporate revenue enhancement rates in Russia

The benchmark rate of Russian corporate tax on profits is xx%. Companies are besides taxed thirteen% on dividend profits. However, corporate taxes in Russian federation and allowable expenses vary depending on the visitor structure.

In the case of self-employed persons, notation that individual entrepreneurs do not pay profit tax and are subject to personal income taxation on their business turn a profit.

Read more than in our guide to Russian corporate revenue enhancement.

Import and export tax rates in Russia

Import taxes in Russia employ to the majority of goods exceeding five,000 p. in value. Since its official entry to the WTO in 2012, Russia has committed to implement all the provisions of the WTO, including an average tariff of 6.1% for appurtenances. Imported appurtenances that carry a higher customs tariff include finished products (15%), foodstuffs (twenty%), agricultural products.

For countries that take a special nigh favored nation (MFN) status, merely base of operations rates apply. Special exemptions too apply to some Commonwealth of Independent States countries. In addition to customs duties, import excise taxes ranging from xx% to 570% may apply for limited categories of products (e.g., luxury appurtenances, alcohol and tobacco products, cars, diesel and motor oil, and other petroleum products).

More than than 154 product lines attract export taxes in Russian federation, with rates that may achieve l%. They mainly business organisation energy products, ferrous and non-ferrous mineral ores, skins, and woods. There are no import and export taxes in Russia on specific merchandise such as transit goods, cultural valuables, and humanitarian aids.

All appurtenances passing through Russian community attract processing charges at a apartment charge per unit depending on value and quantity.

Fuel taxes

As an oil producer, Russia has some of the lowest-priced fuel in the globe. Taxes on petrol and diesel, however, are levied at betwixt 55–65%, although this tin vary.

Airline taxes

There are no departure taxes in Russian federation. However, the flight fee includes several other taxes and surcharges. The total amount varies depending on fluctuating oil prices and government policy. For an indication of what y'all tin can expect to pay, check out each airline's website, as in the case of Aeroflot.

Departure taxes

If your contract ends or y'all get out in the middle of the Russian tax twelvemonth, you lot tin can file for a departure tax render at to the lowest degree one month before y'all exit the land permanently. Your should pay your personal Russian income taxation during the 15 days after filing the tax return form.

Advice on revenue enhancement rates in Russia

Although taxes in Russian federation appear straightforward, there are a number of exceptions and deductions available to resident and not-resident taxpayers alike. The revenue enhancement organization is fluid, and many legal requirements may not be applicative in practice thanks to additional exceptions.

There is also wide scope for interpretation. Equally such, it is appropriate for expatriates to seek adept advice before determining the likely tax consequences and finalizing their returns.

American expats living in Russia can go help coming together their US tax obligations through Taxes For Expats.

Useful resources

Federal Tax Service
Tax code of the Russian federation, Function I
Tax lawmaking of the Russian Federation, Function 2
Regional tax offices in Russia
Deloitte Personal Revenue enhancement FAQ
Thomson Reuters: Overview of individual customer law in the Russian federation

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Source: https://www.expatica.com/ru/finance/taxes/taxes-in-russia-104125/