The main Russian tax points for foreign businesses

We would like to start the 2022 series of our articles from short review of main tax features that should be taken into consideration by every foreign consultant or foreign businessman who works with Russia.

Tax reporting period is started

End of winter and spring is period when Russian companies and individuals are liable to submit their financial statements and tax returns

All Russian tax residents are liable to submit the following forms not later than April 30:

CFC reporting

Russian legal entities and individuals who own or control CFC are liable to submit the following forms:

CFC notification on control in respect of CFC and ownership structure; deadline is 30 of April (failure to file a notification leads penalty – 5800 EUR)
CFC financial statements in respect of 2020 with audit opinion if there is no DTT between Russia and country of CFC; deadline is 30 of April (failure to file a notification leads penalty – 11 600 EUR)
Notification about any changes in the structure of CFC ownership, deadline is 3 months from corresponding change (failure to file a notification leads penalty – 580 EUR)
Please note that the Russian CFC rules treat as CFC not only legal entities but also trusts and foundations

Personal income tax reporting

Individuals who are recognized as tax resident upon the end of 2021 are liable to submit personal income tax return reflecting all foreign and Russian income including CFC income. Deadline is 30 of April (failure to file a tax return leads penalty – 30% of amount due; unpaying tax leads to penalty – 20% / 40% of amount due)

VAT on electronic services

Non-Russian company which provides software, multimedia contents or online services to the Russian clients (individuals or legal entities) should be registered in Russian tax authorities and pay Russian VAT at the rate 20%. This VAT is deductible by the Russian customers – legal entities.

Our team is able to help with tax registration at the Russian tax authorities and with submission of VAT tax returns.

Russian tax benefits for IT companies

Russia provides tax benefits for IT companies:

CIT – 3% instead of 20% (general CIT rate), 1% in some regions

Social contribution tax: 7, 6% of gross salary

For small companies: full VAT exemption, CIT 6% from gross income or 15% from net income

Condition to apply tax benefits: average number of employees should be not less than 7 persons

Corporate Tax