Taxation and licences

The tax system in Russia underwent a comprehensive reform in the year 2001. This reform is designed, in principle, to ease the tax burden on individuals and companies and to simplify the classes of payments for national insurance.
Russia has a uniform rate of tax on the income of individuals. As of 2005 tax in Russia is payable at the rate of 13% for an individual on most income. (non-residents 30%). Russian residents pay 9% on dividend income.
Exemptions are granted to certain income earners.
The standard rate of Russia corporate tax in 2005 is 24%. Income Tax for an Individual
An individual is liable for tax on his income as an employee and on income as a self-employed person. Tax will be payable on income earned in Russia and overseas by an individual who meets the test of a «permanent resident» of Russia. A foreign resident who is employed in Russia pays tax only on income earned in Russia.
To be considered a Russian resident, residence must be established of at least 183 days in Russia during any calendar tax year.
An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. In the case of a new business, the advance payments will be calculated on the basis of the business owner’s estimate. The advance payments will be made at least 3 times in each year.
Certain payments are deductible from taxable income as detailed below. Russia Corporate Tax Russia Corporate tax law underwent a comprehensive reform starting from January 1, 2002.
The tax on company profits is made up of 3 rates: – Federal tax – 5%. – Regional tax – 17% (with a possible incentive reduction of up to 4%). – Local tax – 2%.
The maximum profit tax is 24%.
Small/medium companies meeting certain criteria can choose an alternative «simplified tax system».
The simplified tax system substitues profit tax, v.a.t. and property tax. The tax rates are 6% of the profit, or 15% of the «profit less listed expenses».

Personal Income Tax in Russia

The taxpayers of personal income tax are individuals – residents of the Russian Federation and individuals – non-residents of the Russian Federation who receive income from the sources on the territory of the Russian Federation. Even a foreign citizen can be a tax resident of the Russian Federation if he resides on the territory of the Russian Federation not less than 183 days of the calendar year. The tax rates for personal income tax in Russia are the following:

13 % – for income received by tax residents;
30 % – for income received by tax non-residents on the territory of the Russian Federation;
35 % – for certain kinds of income;
6 % – for income from share (stock) dividends.

An individual who is a non-resident of the Russian Federation may be exempt from taxation by Russian tax authorities, provided that he introduces (forwards) to Russian tax authorities an official confirmation that he is a resident of the state that has double taxation treaty with the Russian Federation. It is also important to note that if the organization pays for the lease of apartments for its foreign employee, the latter shall pay personal income tax on 13 % or 30 % tax rate depending on the period of time he resides on the territory of the Russian Federation.

Employer’s Withholding Obligations

Income tax should be withheld at source, by an employer who is deemed to be a tax agent, with respect to all remuneration paid to individuals (employees and individual contractors, except for those who are duly registered individual entrepreneurs). Under current rules, responsibility to be a tax agent lies with Russian entities, individual entrepreneurs and permanent establishments of foreign legal entities in Russia. In addition to withholding obligations, employers are required to provide information to the tax authorities on income paid and tax withheld, and to notify the tax authorities about the amounts of income received by individuals from which tax can not be withheld.

Tax returns

And individual is required to file his/her annual tax return with the Russian tax authorities in the following cases:

– he/she is self-employed;

– he/she received income from which Russian tax was not withheld by a tax agent;

– he/she is a Russian tax resident and received income from sources outside Russia;

– he/she is entitled to and intends to take an income tax deduction provided for under Russian law.

Overview of Russian taxes

http://www.worldwide-tax.com/russia/russia_tax.asp

http://www.worldwide-tax.com/russia/indexrussia.asp

KPMG in Russia
http://www.kpmg.ru/russian/supl/library/taxlegal/Doing_business_in_Russia.pdf
DOING BUSINESS IN RUSSIA – Business entities, Taxation of Businesses, Taxation of individuals, Foreign Exchange control, Sanctions and penalties, Labour considerations.
http://www.kpmg.ru/russian/supl/library/taxlegal/Tax_Overview.pdf

Ernst & Young Russian Legislation Website
http://www.tax.eycis.com/

The Government of the Russian Federation – Federal tax service
http://www.nalog.ru/english.php?topic=english

Russia Tax, Law & Business Briefing: 2006
Maximize ROI on Your Russian Business Ventures
http://www.wtexecutive.com/cms/content.jsp?id=com.tms.cms.section.Section_2015

International tax review
Russia: Double tax treaties, foreign partnerships and beneficial ownership
PricewaterhouseCoopers
http://www.internationaltaxreview.com/?Page=10&PUBID=35&ISS=16210&SID=513061&TYPE=20

Russian Tax Legislation: Value Added Tax VAT, Profits Tax, Assets Tax, Unified Social Tax, Personal Income Tax in Russia
http://www.vfbs.ru/tax_law.htm

CERTIFICATION IN RUSSIA

Please take a look at voluntary and mandatory certifications and certification process in Russia according to the Federation Law Product Certification Process in the Russian Federation

Useful files
Overview of Certification and Conformity Assesment System

GOST R Conformity Certificate

Hygienic Certificate

Fire safety Certificate

Federal service of Technological Inspectorate of Russia

Fitosanitary Certificate

Product Certification in Russia

Useful links/additional information about certification
http://www.bisnis.doc
Delivery Issues in Getting Goods to Russia

http://permanent.access.gpo
Certification of goods in Russia

http://www.oiml.org
Main Russian State Metrology Service Scientific Center commemorates centenary

http://www.iso.org
International Organization for Standardization

http://stroyinf.ru
Independent non-profitable organization «Interregional quality center»

http://www.russianengineeringgroup.com/certification_services.html
REG International offers a variety of certification services for every occasion and need possible, and not just for importing goods and equipment into the Russian Federation, but also for other countries in the same region.

http://www.russianengineeringgroup.com/COC.html
GOST Russia Certificate of Conformity (GOST-R COC) is required in order to bring equipment across the border into the Russian Federation. Mandatory certification is required by Russian law. Gosstandart of Russia (GOST-R) is a government organization charged with maintaining and enforcing this certification system.

http://www.russianengineeringgroup.com/COCtrans.pdf
GOST R certification system (Certificate of Conformity)

RUSSIAN LEGISLATION

Useful files
Law on Joint Stock Company

Oil and Gas Exploration and Production: Russian Legislation

Franchising in Russia: Main Trends

Useful links
The Federal Law On Technical Regulating

Civil Code of the Russian Federation

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