Russia is planning several changes into its tax legislation, whose effects will swiftly become noticeable among the taxpayers. Hereto it is planned to raise several tax rates to fill in the gaps in the state budget. The new tax rules are expected to come into effect already on January 1, 2025.
The withholding tax will be raised from 20% to 25% (except for the special tax rates such as dividends or intercompany services). Therefore, companies based in EU and USA (or other western countries with whom the Double Taxations Treaties were recently suspended) and using for example licensing structures, will face a royalty withholding tax of 25%.
The general corporate tax rate should also be increased to 25%
IT companies’ tax is expected to become 5% in 2025-2027 whereafter it could switch to the general corporate rate.
The tax hike is supposed to be balanced by additional tax incentives like:
- Improvements to the investment income tax deduction and making it permanent;
- Introduction of a new federal investment income tax deduction (FINV);
- Increase of the depreciation rate applicable to high-tech equipment, R&D expenses, as well as software registration expenses from 1.5 to 2;
- Extension of the regime of regional investment projects for entities subject to inclusion into the register.
The personal income tax rate will be restructured using an extended progression:
- Earnings up to 2,4 million RUR – 13%,
- Earnings above 2,4 up to 5 million RUR – 15%,
- Earnings above 5 up to 20 million RUR – 18%,
- Earnings above 20 up to 50 million RUR – 20%,
- Earnings above 50 million RUR – 22%.
Still some individual earnings will be exempt from the above 5-scale PIT rate. Current two tax rates system of 13% for earnings up to 2,4 million RUR and 15 % for earnings above should be applicable to the:
- Dividends,
- Interest from deposits in Russian banks,
- Sale of real property,
- Security transactions,
- Sale of shares in Russian LLC’s in case they were owned for longer than 5 years.
However, if the total tax base during one year exceeds 50 million RUR, then the taxpayer should lose the right to use:
- Exemptions for the period of ownership upon sale shares/shares owned more than 5 years;
- Deduction in the form of financial results for operations on IIS (individual investment account);
- Deduction in the form of a positive financial results from marketable securities, owned for more than 3 years;
- Exemption in relation to payments under long-term savings agreements.
For individuals not being tax residents of Russia but working remotely for Russian companies the same tax rates as for the tax residents should apply.
The current tax exemption for long-term ownership of shares in Russian entities should become available only for Russian tax residents.
Property tax for individuals, being a local tax, could be raised from maximum of 2% to 2,5% by the municipalities for expensive real property which cadastral value exceeds 300 million RUR.
Mineral tax for coal, iron ore, diamonds, potassium salts will be raised as well.
Excise duties will become applicable for wider range of goods, such as
- An alcohol-containing substance of ethyl alcohol,
- Unlisted alcohol-containing medications,
- Pharmaceutical substance of ethyl alcohol,
- Nicotine raw materials,
- Tobacco-free nicotine mixture for heating.
