Russian Tax Legislation

Russian Tax Legislation:

1. Value Added Tax (VAT)

2. Profits Tax

3. Assets Tax

4. Unified Social Tax (UST) completely disappeared from the Russian Tax Code and was replaced by social contributions payable to:

- the State Pension Fund,

- the Social Security Fund,

- the Federal Medical Insurance Fund,

- the Territorial Medical Insurance Fund.

5. Personal Income Tax

To be more precise, Russia is a federal state with a rather high degree of centralization. The core of the Russian tax system is the Tax Code, which covers all federal, regional and local taxes. Federal taxes include the following major corporate taxes: VAT(Value Added Tax), profits tax and UST (Unified Social Tax) replaced by social contributions (see clause 4 above).

At the regional level, property tax and transportation taxes are levied, and at the local level, land tax.

Federal taxes and tax concessions are set at the federal level and cannot be changed by the regional or local authorities.

An exception provided by the Tax Code is the 24% profits tax, which is payable to both federal (6,5%) and regional (17,5%)  budgets. Regional authorities are authorized to reduce the regional portion of tax by no more than 4%, and this is often used by regional authorities to attract investment.

However, the regional authorities cannot influence, for example, VAT or UST. Regional taxes are regulated by both federal and regional legislation.

Regional legislation can only provide tax concessions which do not contradict federal law.

Often, property and land tax concessions are provided through a reduction in the tax rate (the maximum rate is 2,2% and 1,5%,respectively) or through the exemption of certain companies or property from taxation. Such exemptions are normally conditional on meeting specific investment criteria in the region.