Professional Documents
Culture Documents
in Russia
Your Roadmap to Successful
Investments
kpmg.ru
2 Doing Business in Russia
Moscow
Foreword
Dear Reader,
This brochure has been prepared to provide you with an economic overview of
Russia and to introduce the tax and legal issues that are important when planning
to do business in Russia. In particular, we provide here a discussion of the benefits
of investing in the special economic zones, as well as review current trends in the
wider economy concerning innovation and modernisation.
Russian tax and civil legislation is constantly developing, meaning that sometimes
there is no clear answer to what might be considered a simple question. In such
circumstances, court cases and rulings are important sources for interpreting
legislation.
The exchange rate used in this report is the average official exchange rate of the
Russian Central Bank in February 2019, which was USD 1: RUB 65,8105. Please
note that this brochure is not intended to provide tax or legal advice for any specific
person or situation. Readers are strongly advised to seek professional assistance
from advisors with experience of doing business in Russia before undertaking any
business ventures themselves.
About KPMG
KPMG is one of the world’s biggest advisory, audit, and tax and legal firms. We are
a global network of professional firms employing more than 207,000 outstanding
professionals who work together to deliver value in 153 countries worldwide. KPMG
has been working for 28 years in Russia and has more than 5,500 professionals
working at 23 offices spread across 9 CIS countries.
In recent years, KPMG in Russia and the CIS has been one of the fastest growing
KPMG practices in the world. KPMG has been consistently rated the No.1 audit firm
in Russia from 2009-2018 by Expert RA* and was named Transfer Pricing Firm of
the year in Russia from 2014-2018 and Tax Advisory Firm of the year in 2014-2018 in
Russia by International Tax Review magazine.
Moscow
St. Petersburg Nizhny Novgorod
Voronezh Kazan
Perm
Rostov-on-Don Ekaterinburg
Kiev
Lvov
Minsk
Yerevan Krasnoyarsk
Ufa Novosibirsk
Tbilisi
Almaty Vladivostok
Baku Atyrau Bishkek
Tashkent
Nur-Sultan
Saint Petersburg
Contents
▌ Introduction to Russia 6 ▌Special tax regimes 31
Country snapshot 6 Unified tax on imputed income 31
Measures for encouraging innovation Simplified taxation system 32
and modernisation in the economy 6
Unified agricultural tax 32
—— Special Investment Contracts (SPIC)
—— Regional Investment Projects (RIP)
▌General Comments on Transfer
▌Pricing 33
▌Starting a Business in Russia 9
Legal structures for starting a business in Russia 9
—— Direct sales ▌CFC rules in Russia 37
—— Distributorship contract Corporate tax residency rules 38
—— Representative office or branch Beneficial ownership requirement 38
—— Russian subsidiary
—— Join stock companies ▌Personal Income Tax 39
—— Limited liability companies
Tax base 39
—— Economic partnership
Other taxes payable by individuals 41
Foreign investment law 12
Other business issues 13
—— Licensing requirements ▌Financial Reporting 42
—— Land ownership Russian Accounting Principles 42
Statutory reporting requirements 43
▌Company Law 14 Audit requirements 44
New industry accounting standards
Liabilities 14
for non-credit financial organisations 44
Registration 14
Reorganisation 16
▌Appendices 46
Appendix 1.
▌Labour Law 17
Chart of Withholding Tax Rates 46
Labour regulations 17
Appendix 2.
Employment conditions 18
Fines for the most widespread tax
Work permits for foreign nationals 22 and customs violations 52
Appendix 3.
▌Business Taxation 23 KPMG’s Tax & Legal Department 54
Introduction to Russia
Country snapshot
Capital: Moscow
Area: 17 mln sq km
Number of regions: 87
Moscow
profits, plus 5 years; but not for more than Benefits for investors 3%) during the period in which the
10 years. regional profits tax incentive,
SPIC investors potentially may be eligible
introduced by Regional regulations,
Investment projects in the following for the following key benefits:
applies.
industries1 may be subject to SPICs: 1) tax incentives that may include
machinery manufacturing and —— reduction to 0% of the profits tax due
reductions in profits tax and property to the Regional budget, depending on
automotive; metallurgy; oil processing tax rates, as well as local tax the region (but not beyond 2025).
and petrochemicals; gas processing; incentives;
charcoal, aviation and shipbuilding; —— exemption from, or reduced property
2) no increases in their tax burden, and, tax on, fixed assets generated within
telecommunications, electric power, for certain regulations, guaranteed
electronic and radio electronics; the investment project.
regulatory stability;
pharmaceuticals, medical and Some regions have introduced regional
3) “Single Supplier” status for tax incentives for those signing a SPIC,
biotechnology; forestry, pulp, paper and
investment projects of at least 3
wood processing; and certain agricultural including Moscow Region, Kaluga Region,
billion roubles (USD45,450,000);
industries (this list is not exhaustive). Leningrad Region, Nizhniy Novgorod
4) simplified procedures for obtaining Region, Perm Region, Sverdlovsk Region,
SPICs are currently regulated by Federal the status of “Russian manufacturer”; and Chelyabinsk Region. The scope and
Law No.488-FZ of 31.12.2014 “On the 5) simplified procedures for receiving criteria of the incentives differ from one
Industrial Policy of the RF”, and by Decree land plots for the investment project; region to another.
No. 708 of the Government of the RF
6) subsidies, etc.
Current tax law establishes a number of
of 16.07.2015 “On Special Investment Tax incentives requirements that need to be taken
Contracts for Certain Industries”
(amended as of 16.12.2017). Tax concessions may include profits tax into account for some SPIC projects. For
and property tax incentives as follows: example, to obtain a profits tax benefit, at
The regulatory framework for SPICs
—— application of a 0% profits tax rate for least 90% of the entity’s income should
continues to develop, and further changes
taxes due to the Federal budget be generated by the investment project
can be expected regarding eligible
(instead of the normal rate of 2% or (this is difficult to achieve in modernisation
industries, benefits provided, etc.
1
It may be possible to conclude a SPIC in oil processing, petrochemicals, gas processing, charcoal, electric power, and for certain
agricultural industries from July 2018..
projects); or that tax incentives can only be Regional Investment Projects Russia’s Regions have authority to provide
provided to projects that produce goods (RIP) specific tax incentives for investors
(not services). implementing RIPs (e.g. reducing the
The Russian Tax Code provides tax
profits tax amount due to the Regional
Regions are also entitled to provide incentives to those Russian organisations
budget, or reducing the rate of property
land tax, transport tax and regional levy that undertake Regional Investment
tax).
incentives. Projects (RIP). RIPs may include the
creation of new production facilities or The scope of incentives will also differ
Obligations on investors
modernisation of existing production depending on the type of RIP: there are
When concluding a SPIC, the investor facilities in Russia, and should meet RIPs where investors should first obtain
takes on certain obligations, including the certain criteria. the status of being a RIP participant by
following: being added to the Register of RIPs; and
Tax incentives for investors
—— For Federal SPICS: to invest at least there are RIPs with simplified application
750 million roubles (USD12,096). Tax incentives may include the following: procedures (no need to be added to any
Regional authorities may introduce —— Reduced extraction tax over a 10-year Register).
different thresholds for investments period. This incentive is available for Obligations on investors
under their own specific Regional and projects being realised in certain
Multilateral SPICs if the Region is one regions of East Siberia and the Far To qualify for a RIP and related tax
of the parties; East. incentives, investors should fulfil certain
—— That certain KPIs must be achieved obligations, including the following:
—— Application of a 0% profits tax rate on
within the SPIC’s term, such as profits tax due to the Federal budget —— Invest at least 50 million roubles
production volumes, tax payable (instead of the normal rate of 2% or (USD806,000) during a 3-year period
amounts, number of jobs created, 3%). The length of time the incentive (under certain conditions); or invest at
etc.; can apply depends on the type of RIP least 500 million roubles
—— That production of unique products and the Region in which the RIP is (USD8,065,000) during a 5-year period
must begin; that the best realised. (under certain conditions).
technologies must be introduced; etc. —— Exemption from or reduction to the —— At least 90% of the entity’s income
There is a special application procedure profits tax due to a Regional budget should be generated by the RIP (this
that requires SPIC investors to prepare (instead of the normal rate of 17% or is the profits tax incentive criterion).
and submit documentation related to their 18%). The reduced profits tax rate —— The investor should not be resident in
investment project. This documentation and the period over which this can be a Special Economic Zone, or part of a
includes the SPIC application, a business applied depends on the type of RIP consolidated taxpayer group.
plan, financial models, etc. and Region in which the RIP is —— The RIP should not be aimed at the
implemented. extraction of oil or natural gas and/or
As the regulatory framework surrounding
—— Exemption from or reduction to the oil refining, the provision of related
SPICs develops, so too interest from
property tax on fixed assets used in / transportation services, the
business in this tool is increasing. At related to the investment project. The production of excisable goods (except
least 15 Federal SPICs have already been terms and conditions of the property for cars and motorcycles), or activities
signed. Investors are companies with tax incentive are prescribed in the law for which the 0% profits tax rate is
foreign and Russian-sourced capital from of each particular Region. applicable.
various sectors, including the pharma,
The scope of incentives depends on the The RIP is also a popular tool for
automotive and equipment production
Region where the RIP is being realised. investors. To get the maximum effect
industries.
In general, RIP incentives for certain from the incentives under the RIP, careful
regions of East Siberia and the Far East structuring of the investment project is
differ in comparison to the RIP incentives needed.
provided in the rest of Russia. Additionally,
Starting a Business
in Russia
Legal structures for Copies of technological equipment that
is not manufactured in Russia can be
starting a business exempt from import VAT when imported
in Russia into Russia.
Investors often face the problem of Some goods imported into the EEU are
deciding which legal structure they subject to non-tariff regulations (e.g.
should choose for their business in certification, licensing, quotas, etc.).
Russia. Below you can find guidance on Customs clearance fees generally
establishing the following: depend on the value of the imported
—— Businesses making direct sales goods, but cannot exceed RUB 30,000
—— Distributorship contract businesses (USD484).
—— Representative offices or branches A ‘disposal charge’ is also payable on
—— Russian subsidiaries imported vehicles – the rates of this
charge can vary depending on the engine
Direct sales power, vehicle weight and seating
A foreign legal entity (FLE) that sells capacity.
goods directly from abroad to customers Belarus, Kazakhstan, and Russia form
located in the Eurasian Economic Union the Eurasian Economic Union, a union
of Armenia, Belorussia, Kazakhstan, formed in 2014 by the signing of an
Kyrgyzstan and Russia (hereinafter – the agreement. Since then, they have been
EEU) would not be subject to Russian joined by Armenia and Kyrgyzstan.
taxes and would not be required to These countries’ economies are now
establish a presence in Russia via any more tightly integrated than they were
corporate structures. The Russian under the Customs Union, and freedom
customers are responsible for clearing of movement for goods, services,
the imported goods through customs capital and labour is ensured, along with
and for paying customs duties and taxes guaranteed equal treatment for legal
(import VAT, excise duties), as well as entities.
customs processing fees. In 2012, Russia joined the World Trade
Import duty rates are set in the Unified Organization (WTO) and became a full
Customs Tariff (UCT) of the EEU. member. As part of joining the WTO,
Generally, these import duty rates vary Russia accepted certain commitments
from 5% to 20% and apply to goods related to various sectors of the economy
imported from countries that enjoy and international trade:
‘most favoured nation’ status. If goods —— Import duties on certain products
are imported from developing/least were lowered, while import duties
developed countries with most favoured on computers, components for
nation status, then the customs rates manufacturing computers and
can be reduced. Import VAT is payable hardware components had to have
on the customs value of the imported been removed within three years; Nizhny Novgorod
goods, and increases in proportion to the
amount of the import customs duty.
—— Foreign insurance companies will be can import goods only for their own participants are not considered as
permitted to open branches in internal use, not for further resale. securities under Russian securities
Russia after the transition period; In order to do business in Russia, ROs legislation. Shares in a JSC (Russian
—— Technical regulations will be and branches should be accredited by abbreviation: “АО” or “ПАО”), on
simplified and developed based on the Federal Tax Service of Russia, which the other hand, are considered to be
has been acting as the accreditation securities and are subject to registration
international standards;
agency since 1 January 2015. The with the Central Bank of Russia’s
—— A transition period is provided that department governing admittance to
allows investors in the Kaliningrad Federal Tax Service accredits ROs and
branches of all foreign companies, financial markets. A JSC can be either
and Magadan special economic public (its shares are publicly traded) or
except for those of foreign banks and
zones to continue to receive tax non-public.
foreign civil aviation companies (their
breaks;
ROs are accredited by the Central Bank Foreign companies often use LLCs to
—— There will be a transition period of Russia and the Federal Aviation conduct their wholly-owned business
lasting until 1 July 2018, during Service of Russia respectively). The in Russia. LLC law has many similar
which current industrial assembly ROs and branches are accredited for an provisions to those in JSC law, though
regulations will be in force; unlimited term. there are certain distinctions.
—— Russia will guarantee a certain level Any FLE intending to open its RO or a Generally, only one participant (individual
of transparency concerning branch in Russia must prepare certain or legal entity) is required to establish an
foreign-trade legislation; documents and pay an accreditation LLC or JSC. However, a solely-owned
—— State subsidies to the agricultural fee of RUB120,000 (USD1,900). The legal entity cannot establish another
sector were to be USD9 billion per Federal Tax Service reviews applications LLC or JSC as a subsidiary (i.e. one that
year in 2012. Subsequently, state for accreditation within 25-30 business would be 100% owned by the legal
subsidies decrease yearly. days and issues a certificate with an entity).
accreditation number assigned to the
Distributorship contract RO or branch. At the same time, a tax Joint Stock Companies
registration certificate is issued by the
FLEs have the right to conclude A JSC is a legal entity issuing shares
Federal Tax Service. After that, the
distributorship contracts with Russian to generate capital for its activities. A
FLE should obtain the statistics codes
companies allowing the Russian shareholder is not generally liable for the
assigned by the Federal State Statistics
JSC’s obligations, and a shareholder’s
companies to sell the FLEs’ goods in Service and register the RO or branch
losses are limited to the size of their
Russia. If such an agreement is signed, with the social security funds.
shareholding.
the FLE will not be taxed in Russia. The Bank accounts can be opened after
Russian distributor shall be responsible Different classes of shares are available.
the RO or branch have obtained their
For each share of one particular class,
for clearing the imported goods through accreditation and tax certificates, and
the dividends and voting rights are
customs and paying customs duties and their statistics registration certificate,
equal.
import VAT. Distributorship contracts but prior to their registration with the
are seen as “vertical agreements” from social security funds. Both forms of joint stock company –
public and non-public – can issue
an antitrust law perspective and must In total it takes 6–8 weeks to set up an
common or preferred shares and bonds.
comply with antitrust regulations. RO or branch after all the necessary
Both forms are subject to statutory
documents have been submitted
reporting requirements and regulatory
Representative office or branch to the appropriate accreditation
restrictions, but the requirements for
agencies. Preparation of the package
A FLE can choose to establish public disclosure are less rigorous for
of documents needed for accreditation
a presence in Russia through a non-public JSCs.
involves their drafting, signing,
representative office (RO) or branch. notarisation and, in many cases, legal Recent changes to Russian corporate
Neither the RO nor the branch are formalisation outside Russia. This law introduce shareholder agreements
considered as Russian legal entities, can add 6–8 weeks to the timings where the shareholders can determine
instead being parts of the FLE, and mentioned above. voting obligations at the general
therefore the foreign head office is shareholders meetings, price the sale
responsible for the obligations and The time required to open a bank
of shares, coordinate voting with other
actions of the RO or branch. The RO can account depends on the requirements
shareholders, and engage in other
only conduct “preparatory and auxiliary” of the particular Russian bank chosen by
actions related to management, the
activities for the head office, whereas a the FLE (usually 2–4 weeks).
activities, reorganisation and liquidation
branch can conduct all of the activities of the JSC.
usually conducted by the head office, Russian subsidiary
including signing sales contracts. The The governing bodies of a JSC are the
An FLE can establish a presence in general shareholders meeting, the board
Russian customs authorities often try Russia by incorporating a Russian
to identify the Russian buyers of goods of directors, and the executive body (can
subsidiary. The most common legal be an individual or a group of persons).
being imported, and can question the forms for companies in Russia are
right of a FLE’s branch to declare goods the Limited Liability Company (LLC) The executive body manages the JSC’s
for customs clearance. As a result, it can and Joint Stock Company (JSC). In an day-to-day activities and reports to
be difficult for branches of FLEs to clear LLC (Russian abbreviation: “ООО”) the board of directors and the general
goods through customs, i.e. branches participation units attributable to shareholders meeting.
The shareholders meeting, upon a Unlike JSCs, in LLCs the disposal of and expenses. Allocation of income and
proposal from the board of directors participation units must be notarised expenses can be disproportionate to the
or at its own discretion, can delegate by a Russian notary public. This is number of contributions made to the
the powers of the executive body to done by collecting certain documents, share capital owned by the participants.
a managing company or to a manager presenting them to the notary, and By unanimous decision, the participants
(who should be registered as an drafting an agreement on the disposal of should elect among themselves a
individual entrepreneur). If a FLE is participation units, etc. sole executive body (general director/
appointed as the managing company of president/other) for the partnership.
the JSC, it must have a branch in Russia Economic partnership The sole executive body maintains a
from which it performs its management register of participants with information
This legal form is designed for
functions over the Russian company. on each one, information on the size
companies involved in innovative
activities (including those providing of the participants’ stake in the share
Limited Liability Company venture capital). A partnership can be capital, the contributions made to
The provisions of LLC law are similar to formed by two or more participants, the share capital, and the size of the
those of JSC law. with both individuals and companies partners’ ownership stakes held in the
participating in the partnership. The partnership.
An LLC’s participants are not liable for
the LLC’s obligations, and any losses number of participants in an economic If the partnership’s property is
the participants may experience are partnership cannot exceed 50, and, insufficient to satisfy the partnership’s
limited to the size of their respective if they do, the partnership must be liabilities, and it becomes necessary
participation units. reorganised into a JSC within a year. to impose a court-enforced collection
The Articles of Association signed by order on the exclusive rights the
Transfer of participation units to third
all of the participants is the constitutive partnership holds over the results of
parties can be prohibited by the LLC’s
document of the partnership. When intellectual activities, then the liabilities
charter.
establishing the partnership, the of the partnership to its creditors can
If the LLC charter provides such participants should also conclude a be satisfied on behalf of the partnership
restrictions, a participant has the right partnership management agreement partially or in full by one, several (subject
to withdraw from that LLC at any time, to govern the rights and obligations to the consent of all participants) or all
requiring that the LLC (or the remaining of the participants, management of participants in the partnership.
participants) give the withdrawing the partnership, and its activities, etc. The law on economic partnerships came
participant a portion of the LLC’s net This agreement must be certified and into force on 1st July 2012. Since then,
assets pro rata to the participation units kept by a notary. The share capital only a few economic partnerships have
of the withdrawing participant. of the partnership is divided into the been established (registered) in Russia.
LLC charters can limit the transfer of contributions made by the participants in Therefore, some of the practical aspects
participation units or require that the the form of money, securities, property of conducting commercial activities
consent of other participants or the rights or other rights with a monetary and managing economic partnerships
consent of the LLC be obtained before value. remain unclear.
transferring the units. The participants can manage the
partnership and also allocate income
Kazan
Ekaterinburg
Foreign Investment law If requisition occurs, the value of the companies that carry out some other
seized property must be reimbursed to activities, such as:
Foreign investors enjoy a guaranty that the foreign investor or to the company —— Activities related to influencing
their property rights to their investments with foreign participants/shareholders,
hydro-meteorological and
and to the profits they earn in Russia will and if nationalisation takes place, the
geophysical processes and events;
be respected. value of the nationalised property,
along with incurred losses, must be —— Activities related to using causative
Foreign investments are regulated both agents of infectious diseases (with
reimbursed.
at the federal and regional levels. some exceptions);
The law also offers protection to foreign
According to foreign investment —— Exploring subsoils and extracting
investors from unfavourable changes
law, the rights of foreign investors to mineral resources on land plots of
to Russian legislation if the foreign
conduct business in Russia and to federal significance;
investor holds 25% or more of a Russian
take profits gained in Russia cannot
company’s share capital. —— Aerospace activities;
be less favourable than the rights of
Russian investors, though limitations This protection also covers priority —— Activities of natural monopolies or
can apply to foreign investors to protect investment projects, regardless of the companies with a dominant position
the foundations of the constitutional, foreign investor’s stake in the project’s in the Russian market;
health, and human rights systems, as share capital. Foreign investors are —— Harvesting live aquatic resources;
well as to defend the lawful interests of protected against:
citizens and to ensure state defence and —— Activities related to the use of
—— Newly adopted laws altering nuclear and radiation-emitting
security. customs duties, federal tax rates, materials and radioactive waste;
Foreign investors are generally subject and contributions to non-budget
to the same treatment as Russian —— Activities related to the use of
state funds (subject to certain
investors. Licensing, notification and encryption facilities and bugging
restrictions);
permission requirements that may equipment;
—— Amendments to current laws
restrict business activities apply to both —— Military-technology activities, etc.
resulting in an increase to the
Russian and foreign legal entities. Thus foreign states, international
investor’s tax burden;
The law guarantees protection of the organisations, companies registered
—— Any bans and limitations on foreign
rights and interests of foreign investors. in off-shore territories and companies
investment introduced in Russia. controlled by all of the above cannot
A foreign investor is entitled to recover
losses caused by an unlawful action Foreign investors are protected during enter into transactions that would
or omission by the state authorities in the first seven years of an investment allow them to control Russian strategic
accordance with Russian civil legislation. project’s payback period, starting from companies (e.g. they are barred from
the date when the foreign investor purchasing more than 50% of the voting
Property of a foreign investor or of a began funding the project. shares (participation units) in strategic
company owned by foreign participants/
Russian legislation limits the activities companies, or from participating in the
shareholders cannot be seized to be
of non-Russian investors participating regulatory body of strategic companies,
requisitioned or nationalised unless
in companies that are of strategic value etc.). They are also blocked from
this is stipulated in Russian federal or
to Russia (‘strategic companies’) and in transactions that would result in them
international law.
acquiring, holding or using more than
25% of the book value of the property of Licensing requirements depend on the The Russian Land Code regulates the
strategic companies. type of licensed activity. The decision lease and purchase of land. In practice,
to grant or deny a licence is generally it is still quite difficult to obtain title
Other non-Russian investors (non-
made within 45 (forty-five) business to a land plot in Russia from the state
Russian private companies, non-Russian
days after the authorities have received or municipal authorities due to the
individuals, or Russian companies
an application. There can be shorter complicated public procedures involved,
controlled by non-Russian companies
processing periods in the regulations which can have special regional rules
or individual(s)) can gain control over
governing the licensing of certain or unique requirements for certain land
strategic companies only after obtaining
specific activities. categories (e.g. agricultural or forest
approval from the relevant Russian state
land). However, all owners of buildings
authorities. Generally, licences for each type of
have the exclusive right to purchase
activity are issued for indefinite periods
Other business issues of time. The transfer of a licence
or lease the land plots underlying and
surrounding their buildings.
to another company or individual is
Licensing requirements generally prohibited. Typically, land-lease contracts
(sometimes with a right to purchase)
Certain types of activities can be carried Under the Administrative Offences Code
can be entered into for a maximum term
out in Russia only once special licences of the Russian Federation, the licensing
of 49 years. The leasing or acquiring
issued by the appropriate licensing authorities are entitled to suspend
of state property (apart from when
agency have been obtained. Examples licences if the licensee violates the
executing the aforementioned exclusive
of such activities are provided below: licensing requirements and conditions.
right) is likely to require the winning of
—— encryption activities; Acting without an appropriate licence a tender/auction. If property is leased
can lead to the imposition of significant or obtained without the obligatory
—— production of medicines, aircraft, penalties, followed by a court order tendering procedures, then the
civil and military weapons; requiring enforced liquidation. Penalties transaction may be invalidated.
—— activities related to the storage and and other consequences depend on the
demolition of chemical weapons; Certain other restrictions also apply to
specific circumstances.
owning land, e.g. foreign individuals or
—— overseas and inland waterway For some activities, instead of receiving legal entities do not have the right to
passenger and freight a licence, a company is required to own land adjacent to the state border
transportation; become a member of a professional of the Russian Federation. In addition,
—— activities related to highly explosive self-regulating organisation that sets special laws regulate transactions
and hazardous objects; its own membership criteria (this, involving farmland. According to these
for example, applies to engineering, laws, foreign individuals, legal entities
—— activities related to narcotic and
construction and valuation services). and stateless persons, as well as
psychoactive drugs;
Russian legal entities in which more
—— educational activities, etc. Land ownership than 50% of the share capital is owned
To obtain a licence, an applicant must by foreign individuals, legal entities
Pursuant to the Constitution of the
submit an application to the licensing or stateless persons, may only lease
Russian Federation, land may be held in
authorities. agricultural land.
private, by the state, or be in municipal
ownership.
Company Law
be established by another solely-owned Payment of charter capital Establishment costs (LLC, JSC)
legal entity.
For an LLC, 100% of the charter capital A shareholder (participant) in an LLC or
The maximum number of participants in should be paid within 4 (four) months JSC must pay a state registration fee of
an LLC is limited to 50. If exceeded, the from the date of its state registration. RUB4,000 (approximately USD65) prior
LLC should be reorganised into a JSC or to or at the moment the constituent
For a JSC, 50% of the charter capital
a production cooperative within one year. documents are filed with the registration
must be paid within 3 (three) months
The number of shareholders in a JSC is authority for the company’s incorporation.
from the date of its state registration, and
not limited by law. In addition, when registering a JSC’s
the balance must be paid in full within the
year following state registration. issue of shares, there is a registration
Charter capital fee of 0.2% of the nominal value of
The minimum charter capital for an Bank accounts the issued shares (up to RUB200,000
LLC and non-public JSC is RUB10,000 (approximately USD3,226)).
Rouble and foreign currency accounts
(approximately USD161). For a public There are additional fees for translating
can be opened after the company’s
JSC it is RUB100,000 (approximately and notarising the documents.
registration, though they must
USD1,613). Professional fees for collecting the
meet certain government and bank
requirements. documents, drafting the constituent
documents of the Russian subsidiary,
Perm
and for then submitting the documents, Debt-to-equity conversion the company are transferred to that
range from USD7,000 to USD9,000 for an commission. If the company under
In Russian corporate law, converting
LLC and from USD13,000 to USD16,000 liquidation does not have sufficient
debt into equity is an option available to
for a JSC (fees depend on the location assets to discharge its liabilities,
both LLCs and JSCs, excluding credit
(city) of the company to be incorporated). insolvency procedures may be applied.
organisations (banks).
The time limit for liquidating an LLC
Net assets position An LLC’s debt can be converted into
cannot exceed 12 months, though this
equity in two cases. In the first, the
If an LLC’s or JSC’s net assets on its limit can be prolonged for a maximum of
LLC owes debt to a participant, and the
balance sheet fall below its charter capital 6 months by a court decision.
participant exchanges the debt for an
at the end of the financial year (with the
additional participatory interest in the
exception of the first and second financial Insolvency
charter capital of the LLC. In the second,
years), the company must, within 6 Bankruptcy law protects the creditors of
the LLC is indebted to a third party, and
months after the end of the financial year: companies and outlines the procedures
the third party can exchange the debt for
1) Reduce its charter capital to an participatory interest equal to the amount to be followed in the event of bankruptcy.
amount that does not exceed its net owed. Bankruptcy is understood as the inability
assets (but not lower than the to satisfy all pecuniary claims made
statutory minimum amount of charter Shareholders are permitted to off-
by creditors, or the inability to meet
capital), or set their monetary claims against the
and execute pecuniary obligations
company by purchasing additional shares
2) Take the decision to voluntarily as recognised by a court. A company
liquidate itself. in the JSC only if the shares are issued
is considered insolvent and can
via a closed subscription.
For a JSC, if the value of the net assets consequently be declared bankrupt by
falls below its charter capital by more a court if it fails to meet its pecuniary
Liquidation
than 25% at the end of 3, 6, 9 or 12 obligations for the 3 (three) consecutive
months of the year following the second A company can be liquidated by: months after its obligations are due.
reporting year, or in each subsequent —— A decision made at a general Bankruptcy proceedings can be initiated
reporting year (when, at the end of shareholders/participants meeting. if the debt owed to the company is
the year, the value of net assets is less Reasons can include expiration of the at least RUB300,000 (approximately
than the charter capital), the company term/achievement of the goal for
USD4,839).
must publish 2 announcements (one which the company was established;
per month) in mass media outlets that —— A court decision, if the company
its net assets have decreased. In such committed a material violation of Reorganisation
a situation creditors can demand early certain laws;
Various forms of reorganisation (mergers,
repayment of their obligations by the —— A court decision, if the company consolidations, split-ups, spin-offs and
company. does not submit tax reporting and
transformations) are envisaged in the
has not had any operations via its
If, for the same period as indicated Civil Code for JSCs and LLCs. It is also
bank accounts during the previous 12
above, the net assets of an LLC or a JSC possible to reorganise companies via
months.
fall below the minimum charter capital a combination of different forms of
required by law, the company is subject Liquidation procedures include reorganisation.
to being liquidated. If the shareholders termination of employment and other
contracts, formation of a liquidation Reorganisation entails a number of steps,
or participants do not take the decision
commission, notifying creditors via which include the conducting of a tax
to voluntarily liquidate the company, the
liquidation announcements in the mass audit of the company by the Russian
government authorities are entitled to file
media, settling the claims of creditors, tax authorities, notifying the company’s
a petition in court for forced liquidation,
distributing the remaining assets among creditors (who are entitled to request
and creditors may demand early
the shareholders/participants, closing that the company’s obligations be
termination or fulfillment of obligations
bank accounts, and deregistering the prematurely terminated or accelerated),
and compensation for losses. In practice,
company with the state authorities. etc. This means the reorganisation
forced liquidation is rare if the company
process requires considerable time and
meets its obligations (including taxes). Once a liquidation commission has effort.
been appointed, all rights to manage
Labour Law
Employment conditions —— An employer does not have the right leave allowance, paid by his/her
to require that an employee performs employer and the Social Insurance
functions beyond those set out in Fund, based on the employee’s
Employee guarantees
his/her employment contract, unless salary. This allowance is between
Russian labour legislation provides business circumstances require 60% and 100% of the employee’s
certain guarantees for employees, in otherwise, in which case the salary, depending on length of
particular: employer has the right to transfer the service. However, for 2019, this
—— Standard working hours are not to employee to a position in a different cannot be more than RUB 2,150.68
exceed 40 hours per week. line of work for a period not (USD33) per day. Employers may pay
exceeding one month. An employee temporary disability benefits at a
—— Overtime is permitted for some can be assigned to a job requiring higher rate at the employer’s
employee categories in specific lower qualifications only subject to expense.
circumstances, subject to certain the employee’s written consent. If
conditions being fulfilled. In general, —— Legislation also provides wages
the employer needs additional work covering time spent travelling on
overtime should not exceed four performing by the employee, then
hours in two successive days or 120 behalf of work, for performance of
the employee needs to provide his or the functions of a trade union officer,
hours per year. Overtime is payable her written consent and the relevant
at the following rates: no less than for appearing in court, for going to
paperwork needs to be completed. vote, and for fulfilling other state or
1.5 times the normal salary rate per
hour for the first two hours, and no —— Employees are entitled to 14 paid social duties.
less than twice the normal rate for non-working days of public holidays —— In certain situations, legislation
subsequent hours and for work on and annual leave of at least 28 provides severance pay.
weekends and non-working days. calendar days. For some categories
—— Women are entitled to maternity
Employees additionally have the right of employee, the minimum annual
leave for 70 calendar days (84 days in
to demand additional days off as paid leave established by legislation
case of multiple birth) prior to
compensation for overtime. can exceed 28 calendar days.
childbirth and 70 calendar days (86
—— An employee is entitled to a sick days if there were complications with
Moscow
the birth, and 110 for the birth of Employers are required to sign individual —— When the director of a company or
twins, triplets, etc.) after childbirth. written employment contracts with each company branch commits a single
—— Maternity leave is granted along with of their employees. After the contract is violation of their employment
social insurance benefits, which are signed, a respective order admitting the responsibilities;
paid in amounts defined by statutory employee into work within the company —— When an employee with financial
legislation. Regardless of her period should be issued by the general director. responsibilities commits an act which
of employment with a specific breaches the trust of the company.
The grounds for terminating employment
company, a woman is also entitled to Russian law states that employment
under Russian employment legislation
annual paid vacation, which can be contracts cannot be terminated by the
include, inter alia:
taken either before or immediately employer, inter alia, with the following
after maternity leave, as well as leave —— Mutual agreement, reached by both
types of employee:
until the child’s third birthday. During parties;
her maternity leave and until the child —— Expiration of the employment —— Pregnant women or women with
reaches one-and-a-half years of age, contract’s length; children under the age of three;
the woman is paid a social insurance —— Cancellation of the employment —— Single women with children under 14
allowance. Fathers, grandparents and contract by the employer (as or disabled children under 18.
other relatives are entitled to baby discussed below) or the employee; Where employees are less than 18 years
care leave only under certain
—— Refusal by the employee to continue of age, an employment contract can
circumstances.
working due to a change in the be terminated only with the approval
—— Employees have the right to organise ownership / management or control of the State Labour Inspectorate and
trade unions and participate in the of the employer, or due to the Commission on Minors.
management of the company. employer undergoing restructuring; It can prove difficult to terminate an
—— Generally, trade unions represent the —— Refusal of the employee to continue employment contract on the grounds
interests of the employees in their working following relocation by the
dealings with the employer, ensure that the employee is not suitable for
employer. the position unless there are clear job
that the terms of collective
agreements are being complied with, In general, an employee has the right requirements with demonstrable failings
and participate in resolving labour to terminate a contract by giving two by the employee. Courts generally rule in
disputes in accordance with statutory weeks advance written notice to the favour of the employee when considering
legislation. employer, unless an earlier termination cases of alleged wrongful dismissal.
date is mutually agreed upon. A fixed In practice, companies seek, where
Employment contracts term employment contract can be possible, to secure the employee’s
The Labour Code states that an terminated by an employee if he/she is voluntary resignation.
employment contract should contain injured or disabled and unable to perform
“essential” conditions (e.g. place of the required work, or if management Labour book
work, starting date, position, working violates employment legislation / the
collective agreement / the employment Russian labour legislation requires
hours, salary and benefits, etc.) and that a labour book be kept for each
“additional” conditions (e.g. trial period, contract, or if the employee has other
good grounds for doing so. In some employee who has worked for at least
confidentiality, etc.). five days at a company, if this work is
limited circumstances, the employee has
Employment contracts can be concluded the right to terminate an employment the employee’s main employment. This
for: contract without prior notice. is a fundamentally important document
—— An indefinite term; or in which the employment history of
In a limited number of cases, the each individual is recorded over his/her
—— A fixed term not exceeding five employer has the right to terminate a lifetime. This labour book indicates the
years. contract. These include: grounds for termination of employment
Fixed term contracts are only allowed —— Staff reductions; contracts and records rewards and
when employment relationships cannot achievements at work, the work
—— When an employee has submitted
be established for an indefinite term and performed by an employee, transfers to
false documents when hired;
specific conditions have been satisfied. another place of permanent work, etc.
In particular, fixed term contracts are —— When an employee fails to fulfill their
permitted, inter alia, for the following work duties on a regular basis Every entry into the labour book
without any good reason for why is attested by the signature of the
types of employees:
they cannot; is absent without any authorised representative of the
—— Directors, deputy directors, chief good explanation; is inebriated at employer and by the employer’s official
accountants; work; discloses state, commercial or stamp.
—— Employees working in companies the employer’s internal confidential
created for a specific project; information; steals from the Employee Trial Periods
—— Part-time workers (having more than employer; fails to comply with labour
protection requirements, resulting in Trial periods (typically up to a maximum
one job);
significant damages; of three months) are permitted to assess
—— Individuals in full-time education.
Severance payments
The Labour Code requires severance
pay to be at least two-week’s average
earnings when an employment contract
Kazan is terminated for the following reasons:
—— An employee is drafted or enlisted
into military or, alternatively, civil
service;
—— An employee refuses to be
transferred to work in another
location should the enterprise,
institution or organisation relocate;
—— An employee is unable to work; a
fact confirmed by provision of a
medical certificate issued in
accordance with legislation;
—— An employee refuses to continue
working due to a unilateral change in
the labour agreement’s conditions
made by the employer (such changes
are only possible in exceptional
circumstances);
—— An employee who previously held
the position is being reinstated after
a period of leave (i.e. maternity leave
comes to an end);
—— An employee refuses to find a new
job, should the relevant medical
authorities prescribe this course of
action for the employee, or if the
employer is not able to offer relevant
work.
If an enterprise, institution, or
organisation is dissolved, or if there
need to be staffing cuts, then a one-off
payment of monthly average earnings
is required. Additional payments are
required if the dismissed employee is
unable to find work, but no more than
two months’ worth of payments (three
months subject to specific conditions).
Work permits for foreign It should be noted regarding work —— Extended stay for business trips
permits that each year, by 15 July, outside the region / regions for which
nationals companies must report the number of the HQS Individual Permit was
As a general rule, foreign nationals foreign employees they anticipate to obtained are allowed, as compared to
working in Russia are required to have a engage in the next calendar year. This the standard Individual Permit;
work permit. There are a few exceptions procedure effectively constitutes a quota —— Migration registration procedures do
to this rule mainly related to certain CIS application system. If the employer does not need to be performed when
nationals and other foreign nationals not comply with this and does not receive stays in Russia are less than 90 days;
who possess residency permits. Work notification that they have an approved —— The amount of mandatory social
permits are not always required for the quota, the employer will have any work security contributions made by the
employees of suppliers or manufacturers permit applications rejected next year. Russian employer on behalf of its
of equipment imported into Russia for HQS employees is insignificant.
A company that fails to file a quota
the purpose of installing, supervising application or whose application was
the installation of, or servicing the
Migration registration procedure
denied or partially approved has the right
equipment. to use a list of quota-exempt positions Migration registration is the process of
when applying for a work permit, but only notifying the immigration authorities
Standard Work Permit if the application meets all of the quota of a foreign citizen’s whereabouts. The
The standard work permit application exemption requirements. hosting party is responsible for carrying
process is quite a lengthy and out registration. The hosting party is
burdensome procedure consisting of Work permit applications for either the hotel or the employer (visa
several stages. Each stage involves the Highly Qualified Specialists sponsor), or a landlord, if the foreign
national is not staying in a hotel.
submission of applications together with (HQS)
an extensive list of documents. This process should be completed within
A HQS is a highly-skilled professional
The stages include: seven business days of arrival every
who is a foreign employee with work
time a foreign national arrives in Russia
—— Registration with the local experience and skills or achievements
or travels to another region (changes
employment authorities; in a certain area commanding a monthly
location) within Russia for more than
—— Submission of an application to the salary generally not less than RUB
seven business days.
Employment Service stating that 167,000 (USD2,694).
there are vacancies in the company HQS professionals and their family
Obtaining Individual Permits for foreign
for which only the employment of members are exempt from registration
nationals to work as a HQS has the
foreign citizens will satisfy. The procedures if they arrive and stay in
following benefits:
Authorities must reach a conclusion Russia for a period that does not exceed
—— The Russian employer does not need 90 days, and are exempt for 30 days if
that this is correct. In order to make a
to obtain a Corporate Permit or they travel to another region in Russia.
conclusion, the authorities may send
approval from the Employment
to the applicant potential candidate If HQS professionals and their family
Service;
Russian citizens for interview; members stay in Russia for more than
—— The quota system does not apply to
—— Submission of an application for a 90 days (or 30 days if traveling to another
HQS professionals;
corporate permit from the region), they are required to be registered
immigration authorities to engage —— The Individual Permit can be issued
at the place of stay.
foreign labour; for a term of up to three years;
—— Submission of an application to the —— A HQS professional has the right to
immigration authorities for each obtain a multiple-entry work visa for a
expatriate’s individual work permit. term of up to three years;
The individual permit is issued for a —— The procedure to obtain work
period of up to one year. In a separate permits for HQS professionals takes
process, but based on the work permit, about fourteen business days from
a work visa must be obtained. Its the moment a complete package of
documents is submitted;
procurement also involves several stages
in which a specified set of documents —— An income tax rate of 13% applies to
must be submitted to the immigration the salary paid to an HQS under their
authorities. Russian employment contract,
irrespective of their tax residence
status in Russia;
Business Taxation
New approach to Effective as of 1 January 2019, it is now capital amounts to more than 50%
prohibited to create new consolidated (with the exception of transferors
identifying unjustified tax taxpayer groups. Any agreements on incorporated in one of the countries
benefit the creation of consolidated groups of on a list (of offshore zones) issued by
taxpayers registered by the tax authorities the Ministry of Finance);
In July 2017, a new article – number 54.1 in 2018 will be considered unregistered —— The individual owns more than 50%
– was introduced into the Tax Code. The and not apply. Existing consolidated of the recipient company;
provisions of this article apply to field tax taxpayer groups may retain their status
audits starting after 19 August 2017. —— The property received (except for
until the agreement creating them as a
funds) is not disposed of within one
The core principle set by art. 54.1 of the consolidated group of taxpayers expires,
year from the date of receipt.
Russian Tax Code is that the taxpayer only but no later than 1 January 2023. In
has the right to reduce the tax base and addition, throughout the effective term of Since the start of 2018, the list of non-
(or) the payable tax amount if: their existence, these consolidated groups taxable income related to transferal
will be required to notify the regional tax transactions between shareholders
1) a transaction was actually performed; and companies has been condensed,
authorities in advance of forecast profits
2) the taxpayer is not trying to avoid the tax remittances from members of their excluding the following transactions:
payment of taxes; consolidated group to regional budgets —— receipt of property, property rights or
3) the transactions (operations) were in each current and subsequent financial non-property rights from a
executed by the parties specified in year. At present, 16 consolidated groups shareholder in order to increase net
the respective agreements (or their of taxpayers consisting of more than assets;
subcontractors, if subcontracting is 400 companies have been registered. —— receipt of debt forgiveness by a
allowed in their contracts) A moratorium on the creation of new shareholder.
The article’s provisions provide an consolidated taxpayer groups came into
exhaustive list of the circumstances that effect in 2014-2017. Deductible expenses
only together can be treated as proof that Tax rates From 1 January 2018, companies have
unjustified tax benefit has been received: been able to offset more costs for
The maximum profits tax rate is 20%,
—— supporting documents are signed by comprising 3% (till 2020) paid to the professional training and assessing the
inappropriate people or people not Federal budget and 17% (till 2020) to the qualifications of workers. This training
bearing responsibility; regional budget. The regional profits tax must be in accordance with an agreement
—— counterparties have violated tax laws; rate can be reduced to 12.5% (till 2020) at signed with Russian educational and
the discretion of the regional authorities. scientific organisations or foreign
—— the taxpayer could have gained the educational organisations that have been
same financial result by instead Effective from 1 January 2019, regions licensed to conduct educational activities.
performing other, legitimate will not be able to set reduced profits tax Companies are also allowed to reduce
transactions. rates. This measure has been dictated their taxable base by classifying as training
Detecting and proving that taxpayers have by the need to reduce regional budget expenses those costs incurred when
gained unjustified tax benefits in their deficits by increasing tax revenues. Now, implementing the training programmes.
various operations will be a key focus of the tax rate may only be reduced for In order to receive this tax benefit, at least
future tax audits. The tax authorities are certain categories of taxpayers if this is one graduate of the training programme
developing new approaches to analysing expressly stipulated by the RF Tax Code; must sign a labour contract with the
and confirming that unjustified tax for example, for the residents of special company for a period of at least one year
benefits have been gained. economic zones and participants of within three months following completion
regional investment projects. Reduced of the training. This new tax benefit will
Profits tax tax rates set in the laws of the constituent remain in effect until 31 December 2022.
entities of the Russian Federation before
Tax base 1 January 2018 can apply until 1 January Tax losses can be carried forward without
Taxable profit is calculated as income 2023. The regions will have the right to any time limits, but utilised on no more
minus the expenses recorded in the tax increase these rates for the 2019-2022 tax than 50% of the profits tax base in any
accounts. periods. respective period. This provision covers
losses incurred since 1 January 2007, but
Income is generally determined on an Certain types of income are taxed via will apply only during the transition period
accrual basis. Application of a cash basis a withholding mechanism at flat rates from 1st January 2017 to 31st December
is allowed only if average sales proceeds stipulated by the Tax Code (see the 2020.
for four consecutive quarters are less than section ‘Withholding Income Tax’, p. 31).
RUB 1,000,000, excluding VAT per quarter Tax accounting
Tax concessions
(USD 15,150). The Tax Code requires taxpayers
Non-taxable income (including permanent establishments) to
Expenses are deductible if they are
incurred to generate income, are Gratuitous receipt of assets from a parent maintain separate accounts for profits tax
economically justified, and are properly company, a subsidiary or an individual purposes. Tax accounting rules differ from
documented. There are some expenses should not be treated as taxable income if: Russian statutory accounting principles
specifically mentioned in the Tax Code —— The recipient’s or transferor’s (e.g. with regard to depreciation,
that are also treated as non-deductible. ownership in the other party’s share recognition of interest expenses, etc.)
Russian thin capitalisation rules Under Russian tax legislation, the activities FLEs having no PE in Russia are subject
From 1 January 2017, loans from any of a FLE give rise to a PE: to withholding tax on income sourced
foreign entity will come under the thin 1) if a FLE has a place of business in in Russia (for details, see the section
capitalisation rules if that particular foreign Russia (branch, office, bureau or “Withholding Income Tax” below, p.31).
entity (individual or company) has a direct other independent subdivision), and Filing and payment
or indirect participatory interest of more the FLE conducts business activities Taxpayers (except PEs and certain other
than 25% in both the Russian borrower in Russia on a regular basis. In taxpayers) are allowed to file profits tax
and the foreign lender, or if the direct particular, a construction site located returns either monthly or quarterly. PEs
participation interest of each preceding in Russia, under certain should file profits tax returns quarterly. An
person in each subsequent company circumstances, can be considered annual return is due by 28 March of the
amounts to more than 50%. On the other the PE of the FLE performing the year following the reporting year.
hand, loans from some Russian related construction activities.
parties and independent banks should Taxpayers (except PEs) pay monthly
2) if a FLE acts in Russia through a
not be treated as controlled indebtedness advance payments on profits tax. PEs
dependent agent. A dependent
if they meet certain conditions. These pay quarterly advance payments. Final
agent is understood in Russian
amendments to Russian thin capitalisation payments are due on 28 March of the year
legislation, as well as under the
rules also include changes to the following the reporting year.
applicable double tax treaty (if any),
calculation approach and to exception as a company or individual which, on Filing and payment
rules on the recognition of controlled debt. the basis of contractual relations with Insurance contributions are payable on a
Investment deductions a principal, has and habitually monthly basis.
exercises the right to conclude
An investment deduction mechanism has Generally, those making payments should
contracts and negotiate the essential
been introduced into the Tax Code. From file various reports with the Pension
terms of contracts in the name of the
2018, taxpayers will choose between Fund and the Social Insurance Fund on a
principal or to bind the principal’s
using the standard method of depreciation quarterly basis.
participation into a business activity
for their fixed assets and deducting
(except for activities which are of an Value Added Tax
investment expenditures directly from tax
auxiliary or preparatory nature, such
due (within a set limit). Value Added Tax (VAT) is an indirect tax –
as marketing).
The legislation grants Russia’s constituent the burden of which is carried by the end-
Generally, this approach to calculating customer – that must be calculated and
regions the right to introduce this profits tax for the permanent
deduction, with the regions deciding paid to the Russian federal budget by the
establishments of FLEs is similar to the supplier.
whether they want to exercise that right. approaches established for Russian legal
In addition, the regions determine the entities, with certain exceptions.
fixed asset (and taxpayer) categories that
are or are not eligible for the deduction.
This tax regime is only applicable to newly
commissioned (or modernised) assets
with a useful life of 3 to 20 years (e.g.
buildings, machinery, transport).
This deduction applies to expenditures Krasnoyarsk
such as acquisition, erection,
reconstruction, modernisation, refitting,
and the technical upgrading of a
company’s fixed assets. The investment
tax deduction does not reduce the taxable
base, but rather the amount of corporate
profit tax. This is then transferred to the
federal and regional budgets.
The company / autonomous division must
state directly / account on its balance
sheet and in its policies that it intends
to use the tax deduction as opposed to
applying accelerated depreciation.
Taxation of Foreign Legal Entities
(FLEs)
For FLEs whose activities in the Russian
Federation give rise to permanent
establishments (PE), profits tax on their
income, minus expenses attributable to
the Russian PE, is due.
Under certain conditions, it is also possible The taxpayer is obliged to register its services shipped, performed and rendered
for taxpayers who made prepayments issued VAT invoices in its sales book and from 1 January 2019.
to suppliers to recover the VAT amount its received VAT invoices in its purchase A reduced VAT rate of 10% applies to the
included in the prepayment amount. book in all cases when the respective sale of certain types of medical goods,
When the taxpayer carries out both transaction is subject to VAT in accordance books and periodicals, foods and children’s
VAT-able and non-VAT-able activities with the Russian VAT law. In some cases, goods (in accordance with a list of goods
and/or a 0% VAT rate applies to certain taxpayers are not required to issue VAT provided by the Government of the
transactions, then in certain cases the invoices, in particular if they perform Russian Federation).
taxpayer should account for supplies transactions that are VAT exempt. If
supplies are provided to buyers that do The sale of certain types of goods,
and the respective amount of input work and services is subject to a zero-
VAT separately. Recovery of VAT in not pay VAT or that are exempted from the
obligation to pay VAT, it is permissible – percent VAT rate. The zero percent VAT
these cases is subject to specific rules rate applies, inter alia, to: export sales;
(proportional recovery, a requirement to upon the mutual consent of both parties –
for VAT invoices not to be issued. international transportation services
collect additional supporting documents, and related freight forwarding services;
etc.). When the value of goods, work or transportation and the rendering of certain
VAT Invoice services has been changed (in particular, services related to the transportation of
when changes have taken place to oil, oil products, natural gas and electricity
A VAT invoice is a special VAT document the price or amount of goods, work
needed for VAT recovery. The structure power outside Russia; certain types of air
or services), the seller should issue a transportation; certain services rendered
of this document is established by the corrected VAT invoice and the parties
Russian Government. The VAT invoice at river and sea ports; and certain services
should correct their VAT obligations in the rendered by Russian railway carriers in
differs from a commercial invoice and way prescribed by Russian VAT law.
can be issued either as a hard copy or in relation to the international transportation
electronic format (if electronic document VAT Rates of goods.
exchange with the counterparty is agreed, Effective 1 January 2019, the standard To apply a zero-percent VAT rate, the
it must be conducted in accordance with VAT rate increased from 18% to 20%. supplier should collect the necessary
specific legal requirements). The 20% rate applies to goods, work and supporting documents within the
established time limit and submit a VAT
return with the supporting documents to
the Russian tax authorities.
Generally, sales of goods, works or
services on Russian territory are taxable
at a VAT rate of 20%. A VAT rate of 10% or
0% applies in certain cases.
Exemptions
Certain activity types are exempt from
VAT, in particular:
—— Leasing premises located in Russia
to foreign individuals and foreign
entities accredited in Russia (if there
are reciprocity rules applying in the
respective foreign jurisdiction);
—— Selling residential real estate, certain
medical goods, medical services,
foods produced by school cafeterias,
public conveyance services on
specific types of transport,
ceremonial services, supply of
religious goods, educational services
rendered by licensed nonprofit
educational institutions, certain
services in the sphere of art and
culture, etc.;
—— Repair and technical maintenance
services rendered free of additional
Nizhny Novgorod charge within the warranty period of
the goods (including the value of
spare parts related to these goods);
—— Banking operations and insurance Registration with the tax authority Electronic service suppliers must submit
services; REPO operations; is required even if the e-services are special VAT returns for the electronic
—— The transfer of certain types of exempt from VAT (for example, rights to services they have provided.
intellectual property (IP) rights or the use computer programs under licence Taxpayers submit VAT returns on a
transfer of rights allowing for IP to agreements). A foreign company quarterly basis and pay the VAT in three
be used on the basis of a licence providing e-services must submit its tax equal monthly installments.
agreement; registration application before 15 February
2019. Social Security Contributions
—— surety (guarantee) services provided
by a taxpayer other than a bank. Until 2019, only foreign companies Social security contributions are paid in
The Russian Tax Code provides for certain providing e-services to individuals had to Russia in the form of mandatory insurance
types of VAT exemption, in particular pay their own VAT and register with the tax contributions for a state pension, social
exemptions related to financial and social authorities. If a foreign company provided and medical insurance for each employee
welfare services. e-services to Russian organisations or (personified contributions), and mandatory
individual entrepreneurs, then the Russian social insurance contributions against
Eurasian Economic Union buyers were to act as tax agents and occupational accidents and diseases
The legislation of the Eurasian Economic pay the respective VAT. From 1 January (general, non-individualised contributions).
Union between Russia, Belarus, 2019, Russian companies acquiring
Kazakhstan, Armenia and Kyrgyzstan (the e-services from foreign companies must Insurance contributions are levied on
EEU) creates a single customs territory stop paying VAT as tax agents. However, companies, individual entrepreneurs
between the member states. EEU Russian companies will retain their right and individuals making payments to
legislation establishes special VAT rules to a VAT deduction on e-services if they other individuals as part of employment
on transactions between entities in the meet the eligibility criteria for a specific relations and under civil contracts for the
different member states of the EEU. The deduction. However, to be able to deduct provision of services or the performance
export of goods from one member state VAT, Russian companies need to ensure of work, and under other specific types
to another is subject to a zero-percent VAT that they have the necessary documents, of contract. Contributions are also levied
rate. correctly prepared in compliance with on self-employed individuals, including
the new requirements (in particular, a individual entrepreneurs, notaries and
Application of the zero-percent VAT rate lawyers. No mandatory contributions are
contract and payment and/or settlement
by a taxpayer must be supported by payable by employees.
documents containing the amount of VAT,
possession and provision of the relevant
TIN and KPP (Tax Registration Reason Payments subject to personified
documents, including documents
Code) paid by the foreign provider of the contributions and rates
showing the taxpayer’s application to
e-services).
import the goods and that the import VAT Insurance contributions are payable on
has been paid. The documents should VAT payable to the Russian state remuneration and other payments to
be stamped by the tax authority of the budget individuals working under employment
member state into which the goods were VAT payable to the Russian state budget and civil contracts. Some forms of
imported. is generally calculated as the difference compensation are exempt from insurance
The import of goods from one member between the amount of output VAT on contributions, including business
state to another is subject to import VAT supplies subject to VAT and the amount trip expenses, temporary disability
in the other member state. A taxpayer is of input VAT incurred on purchases (plus allowances, employee dismissal expenses
obliged to submit a separate VAT return the amount of VAT to be reinstated to the (excluding compensation for unused paid
with respect to the import of goods from budget in special cases) in a respective tax vacation days), professional development
the other EEU country. period. expenses, and some others.
New VAT rules for e-services Any excess of input VAT over output VAT For 2019, personified contributions are
can be refunded to the taxpayer from the payable at the rates provided in the table
Effective as of 1 January 2019, the rules below subject to an annual remuneration
state budget upon submission of a special
for applying VAT to foreign companies that threshold established for contributions
application. Generally, VAT refunds can
provide e-services have changed. Now, to pensions and social insurance. The
only be made after the tax authorities
regardless of whether a foreign company threshold is subject to annual revision by
have performed a ‘desk tax audit’ and
provides e-services to individuals or the Russian government.
confirmed the legitimacy of the VAT
organisations, the foreign company must
refund. Employers operating hazardous and
register with the tax authorities, file VAT
returns and pay its own VAT. VAT Payment and Filing dangerous places of work are required
to pay additional pension contributions.
E-services are services rendered through VAT returns should be submitted quarterly The rate of the additional contribution
information and telecommunication in electronic form by no later than the varies from 0% to 8%, depending on how
networks, including the internet, in twenty-fifth day of the month following working conditions are assessed during a
an automated way using information the quarter that has ended. Generally, one special assessment procedure.
technology. The RF Tax Code contains a third of the amount of VAT due should be
list of services classified as e-services. paid by the twenty-fifth day of each of the If the employer has not carried out an
three consecutive months following the assessment of its working conditions, the
reporting quarter. additional contribution may be payable at
the rate of 9% or 6%, depending on the Filing and payment —— 13% on dividends received by an
type of employer. RLE from an RLE or Foreign Legal
Insurance contributions are payable on a
Entity (except for FLEs incorporated
A foreign national’s contributions are paid monthly basis.
in the countries on the Ministry of
in full on the remuneration they earn in Generally, those making payments Finance’s list.
Russia based on their Russian permanent should file various reports on a quarterly
or temporary residence permit. —— 15% on dividends payable to a FLE
and annual basis. A related reporting on
by an RLE.
An employer of foreign nationals who employees is due on a monthly basis.
are staying temporarily in Russia on a Generally, Foreign Legal Entities which
visa must pay personal pension and Withholding Income Tax do not have a Permanent Establishment
social insurance contributions (unless the in Russia are subject to 20% withholding
A FLE in receipt of income sourced in income tax on major Russian-sourced
employee is an HQS). The rate of social Russia which is not attributable to its
insurance contributions is 1.8% rather income, such as interest, royalties,
Russian PE (e.g. rent, royalties, interest income from leasing and rental
than 2.9%. and dividends, freight income, etc.) is operations, etc.
No individual contributions are payable for subject to withholding income tax at
HQS. source. Freight income is taxed at 10%.
Personal contribution concessions Income derived from the business Taxpayers are allowed to apply the
activities of the FLE in Russia (e.g. reduced tax rate or tax exemption
Reduced insurance contribution rates stipulated in double tax treaties concluded
apply to agricultural producers, businesses nonrecurring consultancy services) which
do not give rise to a PE are exempt from between the Russian Federation and
in technology and innovation special the country in which the beneficiary
economic zones, taxpayers applying withholding income tax.
is resident. However, in order to apply
the simplified tax regime (for certain There is no withholding tax on the the aforementioned benefits, certain
activity types), legal entities employing repatriation of profits from a local Russian conditions should be met.
disabled individuals (provided that certain representative office or from the branch
conditions are met), and IT companies, of a FLE to the head office. However, the For a list of double tax treaties and the
among others. proceeds from liquidation are subject to withholding tax rates applicable under
taxation at source. these treaties, see Appendix 1: “Chart of
Mandatory social insurance against Withholding Tax Rates”, p.62.
occupational accidents and diseases Tax rates
When applying the respective provisions
Apart from the aforementioned Withholding income tax rates vary of a double tax treaty, a FLE should
individualised contributions, employers depending on the type of taxable income. confirm that it is resident in a country that
are required to pay mandatory social Tax rates for dividend income are: is party to a double tax treaty with the
insurance contributions against Russian Federation by supplying a tax
occupational accidents and diseases. —— 0% on dividends payable to a
certificate issued by the relevant foreign
These contributions are payable on Russian legal entity (RLE) if this RLE
authorities, as well as providing the
the total payroll at a flat rate that varies has owned at least 50% of the
respective tax agent with confirmation
depending on the risk category that the shares in the dividend payer for 365
that it is the actual beneficiary of the
employing company belongs to, consecutive days, providing that the
income received. Moreover, the Russian
dividend payer is not resident in an
in accordance with the Russian Social entity paying income to the FLE must
off-shore country (e.g. the British
Insurance Fund’s assessment. The have at its disposal (before payment)
Virgin Islands, Guernsey, Jersey, or
minimum rate is 0.2% of payroll; the confirmation that the FLE has the actual
any other state on a list compiled by
maximum rate is 8.5%. Generally, right to receive the income.
the Ministry of Finance of the
office activity is subject to insurance Russian Federation). In the absence of a proper certificate and
contributions against injuries and confirmation, tax should be withheld and
professional illness at a rate of 0.2%. remitted to the budget at the standard
rate.
Rates on Filing and payment
Rates on
Type of insurance Annual threshold remuneration
remuneration up Income tax should be withheld from the
contribution per employee in excess of the
to the threshold income payable to the FLE and remitted
threshold
to the state budget on the date when
payment is made to the FLE.
RUB 1,150,000
Pension insurance 22% 10%
(USD 17,423) A Russian Legal Entity (or FLE with a PE
in Russia) should also file a withholding
RUB 865,000 income tax calculation.
Social insurance 2.9% —
(USD 13,105)
The Tax Code also provides special tax Payers of the unified imputed income tax
regimes under which a taxpayer is entitled are exempt from the following taxes (on
to pay one single tax instead of numerous those operations subject to this tax):
different taxes. —— Profits tax;
This regime can be applied if certain —— VAT (except for VAT payable on
requirements are satisfied. Special tax imports);
regimes include simplified tax, unified
—— Property tax (except for tax payable
agricultural tax, tax on imputed income
based on cadastral value).
and special rules on production sharing
agreements. Unified imputed income tax is levied on
a taxpayer’s imputed income. Imputed
income is determined as the base return
Unified tax on imputed rate from business activities during the
period multiplied by physical (the area
income of land employed, number of vehicles
The local tax authorities allow certain or number of staff) and other adjusting
taxpayers to apply a unified tax on imputed factors.
income if the taxpayers are engaged in: Imputed income tax is paid at a rate
—— Domestic consumer services; of 15%. The municipal authorities can
—— Veterinary services; decrease this rate to anything within a
range from 7.5% to 15%, depending on
—— Vehicle maintenance, repair and
the taxpayer’s category and the type of
washing;
imputed activities.
—— The leasing of car parking places
The unified imputed income tax that is
and car parking services;
payable can be reduced (to 50% of the
—— Passenger and cargo transportation initial tax accrual) by deducting insurance
services (certain restrictions apply); contributions for mandatory pensions
—— Retail trade and catering (certain insurance, medical insurance and social
restrictions apply); insurance for temporary disability or
—— Certain kinds of advertising; maternity leave. It can also be reduced
for mandatory social insurance against
—— Accommodation provision services
occupational accidents and diseases, as
(certain restrictions apply).
well as temporary disability payments
Unified imputed income tax is applicable to employees for the first 3 days of
if the taxpayer satisfies the following temporary disability paid by the employer,
criteria: and for voluntary insurance payments
—— The average number of annual staff under insurance contracts covering the
is equal to or lower than 100; employer’s expenses.
—— Other legal entities have contributed Tax returns and payments are due
less than 25% to the taxpayer’s quarterly.
share capital.
The unified imputed income tax is not Nizhny Novgorod
applied at the same time as the simplified
tax or unified agricultural tax.
Novosibirsk
2
Actual exchange rate of the Central Bank of the Russian Federation as of 1 May 2018 (RUB 62,9997)
3
Actual exchange rate of the Central Bank of the Russian Federation as of 1 May 2018 (RUB 61,9997)
General Comments on
Transfer Pricing
A transfer price is a price subject to —— at least one of the parties to a
monitoring by the tax authorities. The transaction is a resident of Skolkovo
Russian tax authorities have the power to Research Center;
monitor prices to ensure that they reflect —— at least one of the parties to a
market realities and have not been fixed to transaction applies the investment
reduce tax burdens in Russia. tax deduction for profits tax
Current Russian transfer pricing purposes.
(hereinafter, “TP”) rules have been Prior to the introduction of these
effective since 2012, and are based on amendments, all domestic transactions
OECD TP Guidelines. However, there are exceeding RUB 1 billion (USD15,150,138)
some differences. were subject to control without any
TP control applies to transactions exceptions. The amendments apply
between related parties (hereinafter, to transactions in which the income
“Controlled Transactions”). is recognised from 1 January 2019,
irrespective of the contract date.
From 1 January 2019, the majority of
Russian domestic transactions will be Also effective from 1 January 2019, cross-
exempt from transfer pricing control. border transactions are now recognised
However, domestic transactions will be as controlled transactions if the annual
subject to control if the amount of income income exceeds RUB 60 million
from a transaction exceeds RUB 1 billion (USD909,000).
(USD15,150,138) and one of the following At present no threshold amount has
conditions is met: been established on the amount of
—— the companies involved applied income from foreign related-party trade
different profits tax rates (for transactions for recognising them as
example, companies resident in controlled transactions, though the
Priority Development Areas or the threshold amount has been established
Free Port of Vladivostok, or at RUB 60 million (USD909,000) for
participants in regional investment other transactions that can be equated to
projects can apply different rates); related-parted transactions (transactions
with goods traded on international
—— one of the parties to a transaction
exchanges, transactions with offshore
pays the mineral extraction tax at ad
companies).
valorem rates;
—— at least one of the parties to a Despite the positive impact from the
transaction applies a special tax reduction to the administrative burden,
regime (e.g. the unified tax on we cannot rule out the risk that the
imputed income, or the unified tax authorities will try to challenge
agricultural tax); transactions on the basis of there being an
unsubstantiated tax benefit (article 54.1 of
—— one of the parties to a transaction is the Tax Code of the Russian Federation).
exempt from profits tax; Additionally, taxpayers will lose their
—— one of the parties to a transaction is opportunity to make corresponding
an operator or a holder of a licence adjustments only possible in controlled Perm
to develop a new offshore field; transactions. We advise firms to perform
advance checks on the strength of their is no parent company / subsidiary with specified. Understandably, the volume of
companies’ positions in intra-group ownership of more than 25%. data in the notification can be significant.
transactions, looking at whether the A local study is required if the tested It should be filed in XML-format with the
transactions demonstrate performance for party is the Russian company. Foreign Russian tax authorities.
real business purposes. comparables are acceptable if the foreign Russia also has TP documentation
There are five TP methods (similar to party is the one tested. Generally, the requirements. The Russian tax authorities
those in the OECD), and of these, the CUP study should be based on the financial are entitled to request TP documentation
and resale minus method takes priority. statements of comparables for the three during TP audits, and taxpayers must
Russian TP legislation also allows for the preceding years. provide the documentation within 30
use of appraisal reports to support prices Before 20 May of the year following the working days. The TP documentation for
in one-off transactions when no other reporting year, all Russian taxpayers are Russia should be prepared annually and
methods can be applied. There are no obliged to inform the tax authorities of meet certain local requirements.
special safe harbours in tax law except for any transactions they performed which Penalties for non-submission or
interest on intra-group loans. were subject to TP control under Russian omissions/mistakes in Controlled
There are specific requirements regarding tax law. The notification on a controlled Transaction notifications are not significant
the selection of comparables for transaction must include disclosure of (RUB 5,000 (USD76)). The penalty for
benchmarking studies, such as ensuring detailed information about each operation not applying arm’s length prices is 40%
that the activities are comparable, that within that controlled transaction. For (20% during the 2014–2016 transition
net assets are positive, that there are instance, for a buy-sell transaction, the period) of the tax underpaid in Russia.
positive operating profits, and that there price, quantity, place of dispatch, and However, this penalty does not apply if
place of delivery for every item must be a taxpayer provides TP documentation
Novosibirsk
A controlled foreign company (CFC) is: year for which the financial
—— a FLE (not a tax resident of the statements are prepared is not less
Russian Federation), or than 75% of the weighted-average
CIT (Corporate Income Tax) rate in
—— a foreign structure that does not Russia. This exemption only applies
involve the establishment of a to CFCs resident in treaty-protected
formal legal entity (fund, partnership, jurisdictions, provided that these
trust, or other form of collective jurisdictions exchange tax
investment vehicle and/or trust information with Russia (as
management), or determined by the Russian tax
—— a FLE with capital that does not authorities).
consist of shares/participation units The undistributed profits of CFCs are
(foundation units) controlled by a subject to:
Russian tax resident company or
individual. —— Corporate profits tax at 20% if the
controlling person / entity is a
CFC rules are applied to:
Russian-resident company, or
—— FLEs in which a Russian tax resident —— Personal income tax at 13% if the
effectively owns at least 25% of the controlling person / entity is a
capital, and Russian-resident individual.
—— FLEs in which a Russian tax resident If the annual profit of a CFC is less than
effectively owns at least 10% of the the “de minimis” threshold, a CFC’s
capital, if Russian tax residents undistributed profit will not be taxable in
cumulatively own at least 50% of Russia (the threshold is RUB10 million
the capital; (USD151,500)).
—— FLEs controlled by Russian tax
Taxes on CFC profits, such as foreign
residents, i.e. they exercise a
corporate income tax and withholding tax
decisive influence on decisions
levied at source, are creditable against the
regarding distribution of the FLE’s
Russian CFC tax.
profits irrespective of the legal
grounds for that control. Some additional amendments entered
CFC rules provide a number of into force on 27 December 2018:
exemptions from CFC taxation. If an —— in addition to participation through
exemption applies, then the profits of public Russian companies, a person
that particular CFC are not subject to tax, is not recognised as the controlling
though the controlling person / entity is person of a foreign entity if that
not relieved from its reporting obligations. person’s minority interest in the
These exemptions, inter alia, include the foreign company is exercised
following: through direct or indirect
—— Foreign companies treated as an participation in listed foreign
active foreign company, active companies.
holding / or active sub-holding —— when determining an active foreign Vladivostok
company; or company’s share of income
—— Foreign companies for which the (including holding and sub-holding
effective tax rate at the end of the companies), and also of companies
engaged in mineral extraction, the
income specified in clause 3 of The additional criteria should be applied if recipients are allowed to apply DTT
article 309.1 of the RF Tax Code is one of the abovementioned main criteria benefits (reduced WHT rates) only if the
not to be taken into account (except is simultaneously fulfilled both in Russia recipients are beneficial owners of the
for income from the sale/disposal of and a foreign country. In particular, a respective Russian-sourced income.
participation interests in the entity’s FLE should be considered a Russian tax The Tax Code defines a beneficial owner
charter capital). resident if one of the following conditions as:
—— provisions regarding the submission is met:
—— a person who has the right to
of CFC notifications have been 1) the company’s financial accounting independently use and/or dispose of
clarified – notifications must also be or management accounting is the income by virtue of:
submitted when a CFC incurs performed in Russia;
losses. —— participation (direct or indirect) in the
2) the company’s documents are company,
generated and processed in Russia;
—— control over the company, or
Corporate tax residency 3) the HR function at an operational
—— other circumstances, or
level is performed in Russia.
rules —— a person in whose interest another
FLEs cannot be recognised as Russian
A foreign company can be recognised as tax resident if they carry out business person has the power to dispose of
tax resident in Russia if it is managed in activities abroad using qualified personnel the income.
Russia. and assets outside Russia (provided that With effect from 1 January 2017, foreign
Russia will be acknowledged as the place their business is conducted in a double recipients applying for DTT benefits are
of management if at least one of the tax treaty-protected country). Some obliged to provide the Russian payer with
following is true for the FLE: exceptions apply to FLEs engaged in documentation confirming their beneficial
specific listed activities. ownership status, otherwise no DTT
—— The company’s executive benefits will be applied.
bodyregularly takes decisions or FLEs which shift their tax residency to
carries out other activities in Russia Russia become subject to unlimited tax In addition, the Tax Code provides a so-
(on a scale significantly greater than liability in Russia, i.e. their worldwide called “look-through” approach,
in any other jurisdiction); income becomes subject to Russian i.e. the right to apply (under certain
corporate profits tax. circumstances) a reduced withholding tax
—— Senior management personnel
perform steering management of rate under the treaty with the beneficial
the company mainly in Russia. owner’s jurisdiction, even if another
Beneficial ownership person is the immediate recipient of
While not specifically defined, the term
“steering management” is understood to requirement income.
include taking decisions or other actions Generally, the Russian companies paying
with respect to the company’s day-to-day passive income (inter alia, dividends,
operations. interest, royalties, lease income) to foreign
Rostov-on-Don
apply to non-Russian citizens who depart Tax rates differ – from 0.1% to 2% – Transport tax
from Russia. depending on the type and value of the Individuals owning transport vehicles are
An individual’s outstanding tax liability property. The rates may be adjusted by subject to transport tax.
should be paid personally by that taxpayer regional laws.
Taxable vehicles include automobiles,
in Russian roubles. In certain cases tax Certain categories of taxpayer are motorcycles, scooters, buses / coaches,
payments can be made by a third party (an exempt from personal property tax (e.g. airplanes, helicopters, motor vessels,
individual or a legal entity) on a taxpayer’s pensioners). yachts, sailing boats, ships, snowmobiles,
behalf. Individual property tax is assessed by the etc.
Tax refund tax authorities annually and should be paid Transport tax is determined based on the
Depending on the circumstances, a tax by taxpayers based on a tax assessment vehicle’s engine power, seating capacity
refund may be claimed from a tax agent or issued by the tax authorities. and the respective tax rates established by
from the tax authorities. A PIT declaration Land tax regional laws.
may be required if individuals want to Individuals owning land plots are subject If an individual did not receive a tax
claim certain tax deductions. to land tax. assessment on their property and/or
The tax is generally assessed by the tax transport vehicles, they are obliged to
inform the tax authorities about their
Other taxes payable by authorities on the cadastral value of the
property / transport vehicles by 31
land plot.
individuals December of the subsequent calendar
The tax rate depends on the type of land year.
Personal property tax plot and regional laws; it should not
Houses, apartments, cottages, garages exceed 1.5% of the cadastral value of the
and other buildings, along with premises land plot.
and constructions owned by individuals,
are all subject to personal property tax.
Saint Petersburg
Financial Reporting
recommendations contradict federal ded in the reporting period in which In accordance with Russian legislation,
and industry accounting standards or they occur, regardless of when commercial legal entities prepare annual
regulations of the Central Bank of Russia. receipts or payments related to financial statements for each financial
One of the most important documents at these transactions are actually made. year. A financial year is the calendar year
this level is the Chart of Accounts and its —— Principle of timeliness and (1 January – 31 December), with the
related instructions. completeness in recording exceptions being when a legal entity is
transactions: the accountant should registered, reorganised or liquidated. If
The fourth level includes documents required by law, a commercial legal entity
make records on time and ensure
issued by the company itself, which must prepare and submit interim financial
that they reflect all transactions made.
determine its accounting policies in all statements for periods that are shorter
systematic, technical and organisational —— Prudence principle: the accountant
than a financial year. Annual financial
aspects and are approved by an internal should record liabilities and
statements, except for when directed
decision taken by the company on expenses rather than assets and
otherwise by legislation, include the
its accounting policies. If there are income and should not allow for any
following:
any specific accounting methods not hidden reserves.
specified in the relevant accounting —— Substance-over-form principle: —— The balance sheet;
standards, companies have the right to transactions should be accounted —— Financial result reports;
develop them independently and to adopt for based on their economic —— Appendices to the above two
them by including them in the decision substance and business circum- reports containing additional
they take regarding their accounting stances rather than their legal form. information on changes in equity,
policies. —— Principle of non-contradiction: cash flows, movements of borrowed
Branches and representative offices of analytical accounting data should be funds, changes in accounts
foreign companies located in the Russian identical to synthetic accounting receivable and payable, notes, etc;
Federation are allowed to maintain their data on the last calendar day of each —— Tax returns and audit opinions are
accounting on the basis of regulations month. not included in the financial
established in the country in which the —— Rationality principle: application of statements.
foreign company resides, unless these a rational accounting method based The information in the financial
regulations contradict IFRS. However, on the company’s size and business statement for the reporting year and
branches and Representative Offices environment. the previous year must be presented
are still required to submit annual activity —— Materiality principle: data on in comparable formats. A company’s
reports to the tax authorities, along with material assets, liabilities, income, financial statements must include the
their tax returns. expenses and transactions should results of the activities of the company’s
The key accounting principles in the be recorded separately if this branches, representative offices and
Russian Federation are the: information is essential for other structural subdivisions.
—— Separate entity principle: in evaluation of the entity’s financial Companies submit annual financial
accordance with which the assets position or financial results. statements to:
and liabilities of the company are Companies use a working chart of —— Shareholders;
separated from the assets and accounts developed on the basis of the
centrally (government) established Chart —— Statistics authorities;
liabilities of the owner or assets
provided to the entity by other of Accounts. —— Tax authorities;
persons. All business operations performed by —— Other interested users (if the
—— Going concern principle: in the companies should be supported by shareholders so decide).
accordance with which it is relevant source documents in Russian. Currently, according to the Federal Law
assumed that the company will These documents are the primary “On Consolidated Financial Reporting”,
continue operating in the accounting documents underlying the the following Russian companies are
foreseeable future. financial statements. Source documents obliged to consolidate financial reporting
—— Principle of accounting policy prepared in other languages should be in accordance with the version of IFRS
consistency: the accounting policy translated into Russian on a line-by-line officially adopted and published by
selected by the company is applied basis. the Ministry of Finance of the Russian
consistently from one reporting year Federation: credit institutions, insurance
to another, with changes to the companies (excluding insurance
policy only being possible if there Statutory reporting companies exclusively operating in the
are changes in the legislation of the requirements field of mandatory medical insurance),
Russian Federation or in accounting non-state pension funds, management
A company’s financial statements must companies of incorporated investment
regulations, or if new accounting
reflect the company’s economic and funds, and unit investment funds or
methods are developed by the
financial position fully and reliably, along non-state pension funds, clearing
company, or there are significant
with any change in this position and agencies, and those federal state unitary
changes in operating conditions.
the financial results of the company’s companies and joint-stock companies
—— The matching principle: this states
activities. owned by the Russian Government that
that business operations are recor-
appear on an approved list issued by the that don’t draw on the state budget); New industry accounting
Russian Government. —— Companies (except for agricultural
Considering the fact that a typical cooperatives and unions of these
standards for non-credit
company’s financial statements are cooperatives) whose annual financial organisations
prepared in accordance with Russian earnings from the sale of goods (or
Since 1st January 2018, a specific
statutory legislation, and that this the performance of work or chart of accounts, along with industry
differs from IFRS, in order to present provision of services) for the accounting standards, has been
the financial statements to foreign preceding financial year exceed RUB introduced by the Central Bank for
owners or investors, it is normally a 400,000,000 (USD6,451,644), or for some types of non-credit financial
requirement that the statutory financial which the value of assets on the organisations (NFOs).
statements are prepared with an IFRS balance sheet at the end of the year
preceding the financial year exceeds These NFOs are:
reconciliation included. Presenting
financial statements in accordance with RUB 60,000,000 (USD967,747); —— professional participants on the stock
IFRS and, consequently, increasing their —— Companies presenting and (or) market, acting as brokers;
transparency, will facilitate the inflow of publishing consolidated financial —— professional participants on the stock
foreign investment into the economy’s reports; market, conducting dealer activities;
production sector and increase the —— Companies for which audits are —— professional participants on the stock
possibility of more companies obtaining mandatory, according to other market, engaged in forex dealing;
credit. Federal laws. —— professional participants on the stock
Audits of listed companies, credit and market, providing securities
Audit requirements insurance companies, non-state pension management services;
funds, companies in which the state —— professional participants on the stock
The Federal Law on Audit requires that owns more than 25%, state corporations,
the following Russian entities have market, conducting depository
state companies, public not-for-profit activities, including the activities of
mandatory annual audits: organisations, and financial statements specialised investment fund, unit
—— Joint-stock companies; included in the listing prospectus and investment fund and non-state
—— Listed companies; consolidated financial reporting, can pension fund depositories;
only be carried out by professional audit
—— Credit institutions, credit history —— professional participants on the
organisations. Because audits are subject
offices, professional stock market securities market, maintaining
to self-regulation, in order to provide
operatives, insurance companies, registers of the holders of securities;
audit services in the Russian Federation,
clearing agencies, mutual insurance a professional auditing firm should be a —— trade organisers;
associations, currency, commodity member of an appropriate self-regulating —— central counterparties;
and stock exchanges, non-state organisation.
pension and other funds, —— clearing organisations;
incorporated investment funds, —— management companies of
management companies of investment funds
incorporated investment funds, and
unit investment funds or non-state
pension funds (excluding state funds
Voronezh
Appendix 1.
Chart of Withholding Tax Rates
Dividends Interest Royalties Dividends Interest Royalties
Country Country
percent percent percent percent percent percent
Albania 10 10 10 Lebanon 10 0; 5* 5
—— Algeria: 5% on dividends — this rate applies if the recipient —— China: 5% on dividends — this rate applies if the recipient
company (not a partnership) directly owns at least 25% of company directly owns at least 25% of the capital in the
the capital in the Russian company; otherwise, 15%. 0% on Russian company and the holding value exceeds EUR80,000
interest applies to interest paid by the government or its or its equivalent in any other currency; otherwise, 10%.
local authorities or paid to the government, its local
—— Croatia: 5% on dividends — this rate applies if the recipient
authorities or the central bank; otherwise, 15%.
company owns at least 25% of the capital of the Russian
—— Argentina: 10% on dividends — this rate applies if the company, and the holding value is at least USD100,000 or its
recipient directly owns at least 25% of the capital in the equivalent in another currency; otherwise, 10%.
Russian company; otherwise, 15%. 0% on interest applies
—— Cyprus: 5% on dividends — this rate applies if the holding
to interest paid to the government or the central bank;
value is at least EUR100,000; otherwise, 10%.
otherwise, 15%.
—— Cuba: 5% on dividends — this rate applies if the recipient
—— Armenia: 5% on dividends — this rate applies if the recipient
company (not a partnership) directly owns at least 25% of
company directly owns at least 25% of the capital in the
the capital in the Russian company; otherwise, 15%. 0% on
Russian company; otherwise, 10%. 0% on interest applies
interest applies to interest paid to the government, its local
to interest paid to the government or the central bank;
authorities or public bodies; otherwise, 10%.
otherwise, 10%.
—— Egypt: 0% on interest applies to interest paid to the
—— Australia: 5% on dividends — this rate applies to dividends
government, its local authorities, public bodies or the
paid out of profits that carry normal tax rates if the dividends
national banks; otherwise, 15%.
are paid to an Australian company (not a partnership) that
directly holds at least 10% of the capital of the Russian —— Finland: 5% on dividends — this rate applies if the recipient
company. In addition, the Australian company’s holding must company (other than a partnership) directly owns at least
be worth at least AUD700,000, and the dividends must be 30% of the capital in the Russian company, and the holding
exempt from tax in Australia; in all other cases, 15%. value is at least USD100,000 or its equivalent in national
currencies; otherwise, 12%.
—— Austria: 5% on dividends — this rate applies if the recipient
company (not a partnership) directly owns at least 10% of —— France: 5% on dividends — this rate applies if the French
the capital in the Russian company, and the holding value company (i) has directly invested at least FRF500,000 in the
exceeds USD100,000; otherwise, 15%. Russian company and (ii) is taxed in France but is exempt
with respect to dividends (i.e. has a participation exemption).
—— Azerbaijan: 0% on interest applies to interest paid to the
A 10% rate applies if only one of the requirements is
government; otherwise, 10%.
fulfilled; otherwise, 15%.
—— Belarus: 0% on interest applies to interest paid to the
—— Germany: 5% on dividends — this rate applies if the German
government or the national bank; otherwise, 10%.
company owns at least 10% of the capital in the Russian
—— Belgium: 0% on interest applies to interest paid to the company and the holding value is at least EUR80,000;
government, its local authorities, public bodies and to banks otherwise, 15%.
and other financial institutions; otherwise, 10%.
—— Greece: 5% on dividends — this rate applies if the recipient
—— Botswana: 5% on dividends — this rate applies if the company (not a partnership) directly owns at least 25% of
recipient directly owns at least 25% of the capital in the the capital in the Russian company; otherwise, 10%.
Russian company; otherwise, 10%. 0% on interest applies
—— Hong Kong: 0% on dividends— this rate applies if dividends
to interest paid to the government, its local authorities,
are distributed to the Government of the Hong Kong Special
political subdivision or the central bank; otherwise, 10%.
Administrative Region, to the Hong Kong Monetary
—— Brazil: 10% on dividends — this rate applies if the recipient Authority, to the Exchange Fund, or to any entity wholly or
directly owns at least 20% of the capital in the Russian mainly owned by the Government of the Hong Kong Special
company; otherwise, 15%. 0% on interest applies to Administrative Region and mutually agreed upon by the
interest paid to the government or public bodies; otherwise, competent authorities of the two contracting parties; 5% on
15%. dividends — this rate applies if the recipient company (not a
partnership) directly owns at least 15% of the capital in the
—— Bulgaria: 0% on interest applies to interest paid to the
Russian company; otherwise, 10%.
government or the Bank of Bulgaria; otherwise, 15%.
—— Iceland: 5% on dividends — this rate applies if the recipient
—— Canada: 10% on dividends — this rate applies if the recipient
company (not a partnership) owns at least 25% of the capital
company owns at least 10% of the capital or voting shares in
in the Russian company and the value of the capital
the Russian company; otherwise, 15%. 0% on interest
investment is at least USD100,000; otherwise, 15%.
applies to interest paid to the central bank; otherwise, 10%.
0% on royalties — the rate applies to computer software, —— India: a 0% tax rate on interest applies to interest paid to the
patents and know-how; otherwise, 10%. government, its local authorities, public bodies or the central
bank; otherwise, 10%.
—— Chile: 5% on dividends — this rate applies if the recipient
directly owns at least 25% of the capital in the Russian —— Indonesia: a 0% tax rate on interest applies to interest paid
company; otherwise, 10%. 5% on royalties — the rate to the government, its local authorities, political subdivisions,
applies to equipment rentals; otherwise, 10%. the central bank; otherwise, 15%.
—— Iran: 5% on dividends — this rate applies if the recipient —— Malaysia: 15% on dividends — this rate applies to the profits
company (not a partnership) directly owns at least 25% of of joint ventures; otherwise, the domestic rate applies; there
the capital in the Russian company; otherwise, 10%. 0% on is no reduction under the treaty. 0% on interest applies to
interest applies to interest paid to the contracting state, its interest paid to the government and the central bank;
local authorities, public bodies or the national banks; otherwise, 15%. 10% on royalties — this rate applies to
otherwise, 7.5%. authors’ rights and equipment rentals; 15% on royalties —
this rate applies to films and broadcasting programs and
—— Israel: 0% on interest applies to interest paid to the
copyrights on items of literature or art.
government, local authorities and the central bank;
otherwise, 10%. —— Mali: 10% on dividends — this rate applies if the value of the
holding is at least FRF1 million; otherwise, 15%. 0% on
—— Italy: 5% on dividends — this rate applies if the recipient
interest applies to interest paid by the government or its
company directly owns at least 10% of the capital in the
local authorities, paid to the government, its local authorities
Russian company and the holding value is at least
or the central bank; otherwise, 15%.
USD100,000; otherwise, 10%.
—— Malta: 5% on dividends — this rate applies if the recipient
—— Japan: a 0% tax rate on interest applies to interest paid to
company owns at least 25% of the capital in the Russian
the government, its local authorities, public bodies or the
company and the total amount of investments into capital is
central bank; otherwise, 10%. 0% on royalties — this rate
at least EUR100,000; otherwise, 10%. The zero rate applies
applies to copyright royalties; otherwise, 10%.
to dividends paid to a pension fund, if such dividends are
—— Kazakhstan: a 0% tax rate on interest applies to interest paid derived from investments made using the assets of that
to the contracting state, local authorities or public bodies; pension fund.
otherwise, 10%.
—— Mexico: 0% on interest — this lower rate applies to interest
—— South Korea (Rep.): 5% on dividends — this rate applies if paid to the government, the central bank and public bodies,
the recipient company owns directly at least 30% of the and interest paid in respect of a loan for a period of at least
capital in the Russian company and the value of the holding three years granted, guaranteed or insured by specified
is at least USD100,000; otherwise, 10%. banks; in other cases, 10%.
—— Kuwait: 0% on dividends — this rate applies if dividends are —— Mongolia: 0% on interest — this lower rate applies to
distributed to the government, local authorities, public interest paid to the government or the central bank; in other
entities, the central bank, and public financial institutions; cases, 10%. Taxation of royalties — the domestic rate
otherwise, 5%. applies; there is no reduction under the treaty.
—— Kyrgyzstan: a 0% tax rate on interest applies to interest paid —— Montenegro: 5% on dividends — this rate applies if the
to the government, its local authorities, public bodies and recipient company (other than a partnership) directly owns at
the central bank; otherwise, 10%. least 25% of the capital in the Russian company and the
value of the capital investment is at least USD100,000;
—— Latvia: 5% on dividends — this rate applies if the recipient
otherwise, 15%.
company (other than a partnership) owns directly at least
25% of the capital in the Russian company and the capital —— Morocco: 5% on dividends — this rate applies if the value of
invested exceeds USD75,000; otherwise, 10%. 5% on the holding of the recipient company is at least USD500,000;
interest applies to the interest on loans of any kind granted otherwise, 10%. 0% on interest — this lower rate applies to
by a bank or other financial institution of one of the interest on foreign currency deposits or interest paid by the
contracting states to a bank or other financial institution of government; otherwise, 10%.
the other contracting state; otherwise, 10%.
—— Namibia: 5% on dividends — this rate applies if the recipient
—— Lebanon: 0% on interest applies to interest paid to the company (other than a partnership) directly owns at least
government, its local authorities, and public bodies; 25% of the capital in the Russian company and the value of
otherwise, 5%. the capital investment is at least USD100,000; otherwise,
10%. 0% on interest — this lower rate applies to interest
—— Lithuania: 5% on dividends — this rate applies if the
paid to the government, its local authorities or public bodies;
recipient company (other than a partnership) directly owns at
otherwise, 10%.
least 25% of the capital in the Russian company and the
value of the capital investment is at least USD100,000; —— Netherlands: 5% on dividends — this rate applies if a Dutch
otherwise, 10%. 0% on interest applies to interest paid to company (other than a partnership) directly owns at least
the government, its local authorities, public bodies, and the 25% of the capital in a Russian company and has invested in
central bank; otherwise, 10%. 5% on royalties — this rate it at least EUR75,000 or its equivalent in national currency;
applies to equipment rentals; otherwise, 10%. otherwise, 15%.
—— Luxembourg: 5% on dividends — this lower rate applies if —— Norway: 0% on interest if paid to the government, local
the Luxembourg recipient directly owns at least 10% of the authorities, Central Bank or other agreed financial
capital in the Russian company and the holding value is at institutions; otherwise 10%.
least EUR80,000 or its equivalent in national currency; —— Philippines: 0% on interest — this lower rate applies to
otherwise, 15%. interest paid to the government, its local authorities or public
bodies; otherwise, 15%.
—— Portugal: 10% on dividends — this rate applies if the the capital investment is at least USD100,000;
Portuguese company has directly owned at least 25% of the otherwise,15%.
capital in the Russian company for an uninterrupted period of
—— Singapore: 5% on dividends — this rate applies if the
at least 2 years prior to the payment; otherwise, 15%. A 0%
recipient of the dividends is a company which directly owns
tax rate on interest applies to interest paid to the govern-
at least 15% of the share capital in the company paying
ment, its local authorities or public bodies; otherwise, 10%.
dividends; otherwise, 10%. The 10% tax rate also applies to
—— Qatar: 0% on interest — this lower rate applies to interest payments distributed by property investment funds.
paid to the government, its local authorities or public bodies;
—— South Africa: 10% on dividends — this rate applies if the
otherwise, 5%.
recipient company owns at least 30% of the capital in the
—— Romania: 0% on interest — this lower rate applies to Russian company and has directly invested in this
interest paid to the government, the national bank, foreign company at least USD100,000; otherwise, 15%. A 0% tax
trading banks, or Eximbank; otherwise, 15%. rate on interest applies to interest paid by public bodies;
otherwise, 10%.
—— Saudi Arabia: 0% on dividends — this lower rate applies to
dividends distributed to the government, its local authorities, —— Spain: 5% on dividends — this 5% rate applies if (i) the
public bodies, and the central bank; otherwise, 5%. 0% on Spanish company has invested at least EUR100,000 in the
interest — this lower rate applies to interest paid by the Russian company and (ii) the dividends are exempt in
government, its local authorities or paid to the government, Spain. A 10% rate applies if only one of the conditions is
its local authorities, and public bodies; otherwise, 5%. met; otherwise, 15%. 0% on interest — this lower rate
applies to long-term loans (minimum 7 years) granted by
—— Serbia: 5% on dividends — this rate applies if the recipient
credit institutions residing in a contracting state;
company (other than a partnership) directly owns at least
otherwise, 5%.
25% of the capital in the Russian company and the value of
Vladivostok
—— Sri Lanka: 10% on dividends — this rate applies if the —— Syria: 0% on interest — this lower rate applies to interest
recipient company (other than a partnership) directly owns at paid to the government, its local authorities, and public
least 25% of the capital in the Russian company; otherwise, bodies; otherwise, 10%. 4.5% on royalties — this rate
15%. 0% on interest — this lower rate applies to interest applies to films and broadcasting programs, and to
paid to the government, its local authorities, public bodies, recordings for radio/TV broadcasting; 13.5% on royalties
the central bank; otherwise, 10%. — this rate applies to copyrights on items of literature, art or
science; 18% – this rate applies to patents, trade mark
—— Sweden: 5% on dividends — this rate applies if a Swedish
design or models, plans, secret formulae/processes, any
company (other than a partnership) owns 100% of the
computer software programs, or for information concerning
capital in a Russian company (or in the case of a joint
industrial, commercial or scientific experience.
venture, at least 30% of the capital in the joint venture) and
foreign capital invested exceeds USD100,000 or its —— Tajikistan: 5% on dividends — this rate applies if the
equivalent in national currencies; otherwise, 15%. recipient company directly owns at least 25% of the
capital in a Russian company; otherwise, 10%. A 0% tax
—— Switzerland: 0% on dividends — this rate applies if dividends
rate on interest applies to interest paid to the
are distributed to a pension fund (or similar institution), the
government, its local authorities, public bodies or the
government, any political subdivision, local authority or the
central bank; otherwise, 10%.
central bank; a 5% rate on dividends applies if the Swiss
company (other than a partnership) directly owns at least —— Thailand: A 0% tax rate on interest applies to interest paid to
20% of the capital in the Russian company and the holding the government, public bodies, the central bank, or the
value exceeds CHF200,000 or its equivalent in another
—— Export-Import Bank of Thailand; a 10% tax rate on interest
currency; otherwise, 15%.
applies to interest paid to financial institutions. The domestic
Saint Petersburg
rate applies in other cases; there is no general reduction —— Uzbekistan: A 0% tax rate on interest applies to interest paid
under the treaty. to the government, its local authorities or the central bank;
otherwise, 10%.
—— Turkey: A 0% tax rate on interest applies to interest paid to
the government or the central bank, or to the Turkish —— Venezuela: 10% on dividends — this rate applies if the
Eximbank; otherwise, 10%. recipient company (other than a partnership) directly owns at
least 10% of the capital in the Russian company and the
—— UAE: 0% on dividends — this rate applies only if the
holding value is at least USD100,000; otherwise, 15%. A
recipient is a financial or investment institution. A 0% tax
0% tax rate on interest applies to interest paid by (or to) the
rate on interest — this rate applies only if the recipient is a
government, its local authorities, the central bank or public
financial or investment institution. The treaty does not cover
bodies. If the interest is paid on a loan granted/guaranteed
royalties.
by a financial institution of a public character with the
—— UK: 10% on dividends — applies if dividends in the hands of objective of promoting exports and development, then a 5%
the recipient company are subject to tax. tax rate on interest applies to interest paid to the bank;
otherwise, 10%. 10% on royalties — this rate applies to fees
—— Ukraine: 5% on dividends — this rate applies if the holding
for technical services; otherwise, 15%.
value is at least USD50,000; otherwise, 15%. A 0% tax rate
on interest applies to interest paid to the government or the —— Vietnam: 10% on dividends — this rate applies if the
central bank; otherwise, 10%. recipient company has invested in the capital of the Russian
company at least USD10 million; otherwise, 15%.
—— USA: 5% on dividends — this rate applies if the recipient
company owns at least 10% of the capital or voting power in
the Russian company; otherwise, 10%.
Appendix 2.
Fines for the most widespread tax and
customs violations
Fines based on the Tax Code
Type of infringement Fine
RUB 10,000 (approximately USD 161) if the registration deadlines are missed.
Late registration with the tax
If activities have been conducted without registration: 10% of the income received
authorities
as a result of the activities, but not less than RUB 40,000 (approximately USD 645)*
5% of the amount due for each full or part month late, but not more than 30%, and
Late submission of tax returns
not less than RUB 1,000 (approximately USD 16)*
In the above cases, if a taxpayer corrects the errors the thirtieth day of delay in payment, the late payment
themselves and pays the additional taxes and late interest rises higher to 1/150 of the Russian Central
payment interest payable, fines for erroneous Bank’s refinancing rate.
bookkeeping and tax calculation are not assessed. At present, the interest would be 0.025% per day during
Normally late payment interest is charged at 1/300th of the first thirty days of delay in payment. After the thirtieth
the refinancing rate of the Central Bank of the Russian day of delay in the payment of interest, it would increase
Federation (7.5% as at 21 February 2018) for each day to 0.05% per day (since October 2017).
the tax payment was delayed. As of 1 October 2017, after
Appendix 3.
KPMG’s Tax & Legal Department
Why KPMG Corporate tax services
KPMG in Russia and the CIS employs more than 400 tax and KPMG has teams dedicated to addressing all of the tax issues
legal consultants, consisting of both domestic and foreign that corporations confront:
specialists. They bring with them vast experience not only in —— Indirect tax;
advisory services but in the business world as well.
—— Transfer pricing;
With his extensive knowledge of tax advisory services in
Russia, Mikhail Orlov, the Head of Tax & Legal in Russia and —— Effective management of tax liabilities (and its outsourcing);
the CIS, also chairs the Tax and Customs Law Expert Council —— Development of problem-solving methods;
of the Russian State Duma, drafts legislation and works as —— Tax considerations during restructuring;
a Public Tax Ombudsman under the Russian Federation’s
Presidential Commissioner for the Rights of Business People. —— International tax planning;
As the head of a strong and cohesive team of professionals, —— Tax structuring for mergers and acquisitions, including
Mikhail makes it the department’s priority to be not only support for the times after companies have been
consultants who help solve for our clients their urgent and integrated.
sensitive issues quickly and efficiently, but also to be their
trusted partners. People services
We provide services for private clients and company staff. These
Our team services include helping to ensure personal compliance with tax
KPMG in Russia employs more than 400 tax and legal legislation, implementing relevant company-wide programmes,
professionals, including both local and foreign specialists. pension planning and private client services. Our specialists also
They bring with them vast experience not only in advisory provide professional wealth management services. Personnel
services also include secondment structuring (both inbound and
services but in the business world as well.
outbound) as well as related tax, legal and immigration issues.
Glossary of terms
AUD Australian dollar JSC Joint stock companies
BRIC Brazil, Russia, India And China Kg Kilogram
BVI British Virgin Islands LLC Limited liability companies
CHF Swiss franc OJSC Open joint stock companies
IFRS International Financial Reporting Standards USSR Union of Soviet Socialist Republics
VAT Value added tax
IT Information and technology
YoY Year-on-year
Ekaterinburg
Our offices
KPMG in Russia
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without
appropriate professional advice after a thorough examination of the particular situation.
Legal services may not be offered to SEC registrant audit clients or where otherwise prohibited by law.
© 2019 KPMG. KPMG refers JSC “KPMG”, “KPMG Tax and Advisory” LLC, companies incorporated under the Laws of the Russian
Federation, and KPMG Limited, a company incorporated under The Companies (Guernsey) Law, as amended in 2008.
All rights reserved. Printed in Russia.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.