Tax Law (Russia)

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The foundation of Russian tax law is the Tax Code of the Russian Federation ( Налоговый Кодекс Российской Федерации ). The first part, which came into force on January 1, 1999, regulates the general principles of tax collection. The second part, which came into force on January 1, 2001, regulates the specific tax rates and the method of payment.

historical development

The 1990s

Before the new tax code came into force, the Russian tax system was piecemeal both in terms of content and region. The tax collection was based mainly on laws from the last years of the Soviet Union, specific tax rates were usually set by regional authorities. This was partly used for excessive tax collection, but also to create tax havens.

The tax code

The first draft of the tax code was presented to the Russian Duma in January 1996. Strong resistance in the Duma, however, repeatedly led to delays, so that a new version of the first part of the law was only finally passed in the course of an anti-crisis package in July 1998. The law came into force on January 1, 1999. The most important innovation was the centralization of tax collection. The standardization of the tax rates only took place in the context of the second part of the tax code, which was passed in August 2000 and came into force on January 1, 2001. The second part included the conversion to a flat tax system with a flat income tax of 13% and social security contributions of a maximum of 35.6%. Important further revisions of the tax code included the reduction of the corporate income tax rate to 24% as of January 1, 2002, the reduction of the VAT rate to 18% as of January 1, 2004 and the reduction of social security contributions to a maximum of 26% as of January 1, 2005.

Innovations 2009

In response to the financial crisis , Prime Minister Vladimir Putin announced a series of tax breaks in November that came into effect on January 1, 2009. In particular, the profit tax was reduced from 24% to 20%. The immediately realizable tax depreciation for certain capital investments has been increased from 10% to 30%.

Tax types

The categorization of taxes as federal, regional and local is based on the lowest authority that can make decisions regarding the tax rate. The distribution of the income is independent of this.

Federal taxes

value added tax VAT on most goods is 20% from January 1, 2019 (until December 31, 2018: 18%). A reduced rate of 10% applies to selected product groups (in particular various categories of food and children's needs). A number of product groups, including pharmaceutical products, are entirely excluded from VAT. The export of goods is subject to the zero tax rate
Excises Excises are levied on alcohol and tobacco products as well as petrol, diesel and cars with an engine of over 90 hp. There are a total of 22 different tax rates. For example, filter cigarettes are charged at least 150 rubles plus 6% of the market value per 1000 pieces, on cars with more than 150 hp, 214 rubles per hp. On gasoline with more than 80 octane 3629 rubles per ton. Beer with a maximum alcohol content of 8.6% is charged 3 rubles per liter.
Income tax The income tax on salaries is a flat rate of 13% for tax residents and 30% for non-residents. The tax on salaries and wages must be withheld by the employer and paid to the tax authorities on the day the salary is paid. Taxes are paid at the place of registration of the employer and not at the place of residence of the employee. The self-employed, entrepreneurs, recipients of other forms of income and sellers of assets must submit their own tax return.
Social security tax The new law on social security contributions in the Russian Federation abolishes the previous regressive graduation of the burden on salaries and introduces a flat rate. Accordingly, companies are obliged to pay social security contributions for wages up to 415,000 rubles, all amounts above this amount are exempt from social security contributions. The Russian government can adjust this wage level from January 1, 2011 in the event of rising average wages. The uniform percentage will be 26% from January 1, 2010, and 34% from 2011. The social security contributions are divided as follows:

Transition rates for 2010: 20% in the Pension Fund, 2.9% in the Social Insurance Fund, 1.1% in the Federation Health Insurance Fund and 2% in the Regional Health Insurance Fund.

Percentages from 2011: 26% in the Pension Fund, 2.9% in the Social Insurance Fund, 2.1% in the Federation Health Insurance Fund and 3% in the Regional Health Insurance Fund

Profit tax The profit tax is a uniform 20%. It applies to all Russian and foreign companies that count as tax residents and is calculated on the difference between income and expenditure.
Tax on extraction of raw materials For most raw materials, taxes are levied as a percentage of the market value of the extracted quantity. The tax rate varies between 0 and 17.5% depending on the raw material. Other regulations apply to oil and gas. The tax rate for gas is a flat rate of 147 rubles per thousand cubic meters. The tax on oil production varies depending on the market price and the characteristics of the respective oil fields. It can be from 1000 to 13800 rubles per ton.
Water tax The water tax affects all users of public waters for abstraction, as a transport route or for the generation of hydropower. The fees vary a lot. For example, for water abstraction from rivers, depending on the river and region, they are from 246 to 654 rubles, for seawater from 4.44 to 14.88 rubles per thousand cubic meters.
Tax on the use of animal and water resources Holders of a state license to hunt or fish pay flat fees per animal or per kilogram of fish. For example, there are 3,000 rubles for a bear and 20 rubles for a pheasant.
State fees The state fee schedule regulates all fees for matters relating to government bodies, in particular judicial and reporting matters

Regional taxes

Transport tax The transport tax applies to land, water and air vehicles. The tax is usually based on the engine power; for most vehicles, the tax rate itself also increases gradually with increasing engine power.
Wealth tax for companies Wealth tax is levied on net fixed assets (ie less depreciation). According to the Code, the tax can amount to a maximum of 2.2%. The tax rate varies as it is determined regionally.
Gambling business tax The tax on gambling transactions is levied as a flat rate per slot machine or gaming table. The tax code specifies both a maximum and a minimum. According to current planning, gambling in Russia will be banned from June 1, 2009 except for four specially designated gaming zones.

Local taxes

Property tax Property tax is levied on property and is set by the local authorities. However, the local tax rate may not exceed 1.5% (for special exceptions 0.3%) of the property value.

literature

  • Wedde, Rainer; Frank, Sergey (ed.), Investment Guide Russia, 2009

Web links