Russian Tax Law

Sources of Russian Tax Law

Russian tax law is codified in the Tax Code of the Russian Federation (Nalogoviy Kodeks Rossiyskoy Federatsii), comprising Part One (the General Part, adopted 1998) and Part Two (the Special Part, adopted 2000, effective 1 January 2001). The Tax Code establishes the exhaustive list of federal, regional, and local taxes under Articles 13–15, implementing the constitutional principle that no tax may be imposed except by law. Part One contains the general provisions governing the tax system: the definition of taxes (nalogi) and fees (sbori), the rights and obligations of taxpayers, tax control procedures, and tax liability. Part Two sets out the specific rules for each tax, including the object of taxation, the tax base, the rate, the tax period, the calculation method, and the payment procedure. The Federal Tax Service (Federalnaya Nalogovaya Sluzhba, FNS) administers tax law under the Ministry of Finance. Interpretive guidance is issued by the Ministry of Finance and the FNS. Tax disputes are adjudicated by the arbitration courts (arbitrazhnye sudy) and, for individuals, by courts of general jurisdiction, with ultimate review by the Supreme Court of the Russian Federation.

Federal Taxes

The corporate profits tax (nalog na pribyl organizatsiy) is imposed at 20%: 17% allocated to the regional budget and 3% to the federal budget. Regional authorities may reduce the regional portion to as low as 13.5% for certain categories of taxpayers. Tax-exempt income includes dividends received from subsidiaries (subject to a 50% or more ownership threshold and 365-day holding period) and certain state subsidies. Deductions are allowed for economically justified and documented expenses (raskhody). Losses may be carried forward for up to ten years.

The personal income tax (nalog na dokhody fizicheskikh lits, NDFL) applies a flat rate of 13% on most income. From 2021, a progressive rate of 15% applies to income exceeding 5 million RUB per year. Non-residents are taxed at 30% on Russian-source income. Dividends are taxed at 13% for residents and 15% for non-residents. Specific deductions include the standard deduction, social deductions (education, medical, charitable), property deductions (purchase of housing up to 2 million RUB), and professional deductions for self-employed individuals. Certain categories of income are exempt, including state pensions, scholarships, and alimony.

The value added tax (NDS) is levied at 20% standard and 10% reduced (for specified food, children’s goods, medical products, and periodicals). A large number of goods and services are exempt, including medical services, educational services, passenger transport, financial services, and insurance. Export sales are zero-rated, with input VAT recoverable. Taxpayers may apply for exemption if their revenue from goods and services (excluding imports) does not exceed 2 million RUB over three consecutive months. The mineral extraction tax (NDPI) applies to extracted minerals, including oil, natural gas, and coal, at rates determined per tonne or per cubic metre.

Regional and Local Taxes

Regional taxes include the corporate property tax (nalog na imushchestvo organizatsiy) at rates up to 2.2%, with movable property excluded from the tax base from 2019. The transport tax (transportny nalog) is levied on vehicles at rates set by regional authorities within federal limits. Local taxes include the land tax (zemelny nalog) at rates up to 1.5% and the personal property tax (nalog na imushchestvo fizicheskikh lits) assessed on the cadastral value of real estate, with progressive rates from 0.1% to 2% depending on the property type and value.

Special Tax Regimes

The simplified taxation system (USN) allows small businesses to elect a single tax replacing corporate profits tax, corporate property tax, and VAT (except import VAT). Taxpayers may choose a base of 6% of income or 15% of income minus expenses. The unified tax on imputed income (UTII) was phased out from 2021. The patent system (PSN) permits individual entrepreneurs to purchase a patent covering a specific business activity, paying a fixed tax based on imputed income. The agricultural tax (ESKhN) applies to agricultural producers at 6% of income minus expenses.

Tax Administration

The FNS conducts desk audits (kamerálnaya proverka) at the tax authority’s premises and field audits (vyezdnaya nalogovaya proverka) at the taxpayer’s premises. Field audits are generally limited to one per taxpayer per year and may cover up to three consecutive tax periods. Taxpayers must maintain tax registers and submit declarations electronically if their average headcount exceeds 100. Tax liability includes the tax assessment, penalties (peni) at 1/300 of the Central Bank refinancing rate per day, and fines (shtrafy) ranging from 20% to 40% of the unpaid tax. Criminal liability for tax evasion under Articles 198 and 199 of the Criminal Code applies where large or especially large amounts are involved.