Tax system

In this chapter of Doing business in Russia, we provide an outline of the following aspects:

General approach

Recent developments

The most important amendments to taxation laws over the last three years include:

  • Since 2019, foreign companies and foreign intermediaries providing e-services are obliged to register for VAT purposes in Russia and pay taxes locally, under certain conditions. This obligation applies to all types of clients of such foreign companies (i.e. Russian legal entities, individual entrepreneurs and individuals).
  • Special administrative areas were created on Russky Island (Primorsky Krai) and Oktyabrsky Island (Kaliningrad Region). Residents of these areas who meet specific requirements can enjoy some tax benefits.
  • Significant tax benefits under corporate profits tax and insurance contributions were introduced for accredited IT companies and developers of electronic components (provided they satisfy certain criteria). At the same time, the scope of VAT exemptions on the disposal of rights to computer software and databases (which were equally applied both by local and foreign companies) has been materially reduced.
  • A progressive personal income tax scale for income received by Russian residents has been introduced. From 1 January 2021, Russian tax residents’ income exceeding RUB 5m (EUR 55,555 1 At the notional exchange rate of RUB 90 = EUR 1, as used for convenience throughout this guide. )  is taxed at the rate of 15% instead of the previously applicable flat rate of 13%.
  • General transfer pricing control was abolished for domestic intragroup operations (except in specific cases). 
  • Organisations active on the financial market are now under an obligation to collect financial information about their customers, as well as their customers’ beneficiaries and controlling persons, and to provide such information to the tax authorities. If, at the request of such an organisation, a customer, beneficiary or controlling person refuses to disclose the required information, operations between the customer and the organisation must be suspended.

The overall tax burden for corporate taxpayers remains essentially the same, but a number of developments over the past years (both at legislative level and in terms of practice by the tax authorities) may be viewed as having negatively affected the tax climate for such corporate taxpayers:

  • The rules for calculating penalties on the amount of tax debt have been amended. Tax administration and tax control in respect of insurance payments have been expanded.
  • Court and administrative tax practices are becoming more successful. In particular, most court cases of transfer pricing in Russia were lost by taxpayers to the tax authorities. 
  • The tax authorities continue to conduct pricing audits primarily in relation to taxpayers engaged in foreign trade transactions in respect of mineral resources.
  • The concept of an “unreasonable tax benefit” was introduced in the Russian Tax Code. The provisions will lead to an increase in the scope of the tax authorities’ control on aggressive tax minimisation schemes used by taxpayers. Some significant aspects of criminal liability for tax crime were clarified by Resolution No. 48 of the Plenum of the Russian Supreme Court dated 26 November 2019. Failure to pay taxes, fees or insurance contributions could lead to criminal liability for persons duly authorised to sign documents submitted to the tax authorities on behalf of the company (for example, directors or authorised representatives).

Amendments to Russian tax legislation have brought it closer to the best practices developed by the OECD 2 The Organisation for Economic Cooperation and Development. . In particular, in recent years:

  • Requirements on a “three-tier documentation system” for multinational groups of companies have been implemented in Russia. The new rules impose additional reporting obligations on participants in and parent companies of such groups.
  • In 2018, Russia began to automatically exchange financial information with 71 countries and territories 3 Order No. ED-7-17/[email protected] of the Federal Tax Service dated 3 November 2020. .
  • The Russian tax legislation was amended for the purpose of ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS. In 2019, the Russian Tax Code introduced a mutual agreement procedure mechanism within the application of double taxation treaties (“DTTs”) in order to settle disputes between parties. 

Core legal framework

Part I of the Tax Code dated 31 July 1998 has been in force since 1 January 1999; and Part II of the Tax Code dated 5 August 2000 has been in force since 1 January 2001 (together, the “Tax Code”). The Tax Code sets out general tax principles and applicable taxes, as well as the rights and obligations of taxpayers and the state tax authorities.

According to the Tax Code, taxes in Russia may be categorised as follows:

  • Federal taxes applied throughout Russia at uniform rates, such as VAT. Certain taxes have a federal and a regional component (e.g. corporate profits tax) and may have their regional component reduced at the discretion of the relevant regional authority.
  • Regional taxes and local taxes determined by the Tax Code and the local or regional government authorities, which are collected locally or regionally. Lower-tier authorities may not grant concessions for taxes governed by a higher authority.
Federal taxesCorporate profits tax
Excise duties
Payroll-related levies
Taxes on natural resources
Excess-profits tax on hydrocarbon production
State duties
Personal income tax
Water tax
Regional taxesCorporate property tax
Transport tax
Gambling tax
Local taxesLand tax
Individual property tax
Sales duty

As a result of this tax structure, taxpayers may face tax and administrative burdens (including making tax filings and paying tax) both at federal and regional levels. Several tax payments may need to be made when a company has separate subdivisions in more than one Russian region.

Key contacts

Dominique Tissot
Head of Tax | Head of Energy Efficiency & Renewables
T +7 495 786 30 88
Hayk Safaryan
Head of Customs
T +7 495 786 30 59


  • Introduction
  • Common forms of business structures for foreign investors
  • Anti-monopoly issues
  • Contracts
  • Tax system
  • Customs regulations
  • Currency control
  • Lending in Russia
  • Employment/Migration
  • Personal data protection
  • Intellectual property
  • Advertising issues
  • Anti-corruption and compliance
  • Real estate and construction
  • Dispute resolution
  • Corporate bankruptcy
  • E-commerce
  • Import substitution and production localisation in Russia
  • Banking sector
  • Environment, energy efficiency and renewables
  • Infrastructure and public private partnerships
  • Oil & gas