The following article is an excerpt from Awara Doing Business in Russia Guide 2025. Awara offers an ultimate guide of why Russia is a great place to do business, and how to realize your successful market entry.

Choice of Tax Regime

Most commonly used tax regimes in Russia:

• General system of taxation (GST)
• Simplified system of taxation (SST)

The choice of tax regime determines what taxes your company will pay in the future (see “tax table”).

The general taxation system can be used by all organizations regardless of the type and scale of their activities. The general system is applied automatically from the moment of company registration, unless the organization declares its choice of the simplified system.

The simplified system of taxation is a special beneficial tax regime extended to small and medium-sized enterprises. A company has the right to apply the simplified system of taxation, if the criteria listed below are met.

Criteria for simplified system of taxation (SST):

• Annual income < 450 mio RUB
• Fixed assets book value < 200 mio RUB
• Number of employees < 130 employees
• Shares (%) of other companies in the charter capital < 25%
• No branches
• Not applicable for some types of businesses (banking, insurance, investment fund, mining of cryptocurrencies, etc.).

If the company violates the criteria specified above, it loses the right to apply the simplified taxation system from the 1^st day of the month in which such a violation occurred.

General tax rates applicable for SST*:

• 15% (tax base = income minus expenses), or
• 6% (tax base = income of the company)

SST companies taxed for 15% are required to pay a minimum tax in the amount of 1 % of revenue even if there is no profit. Companies that have chosen 6% may reduce the tax normally due by a maximum of 50 % by deducting amounts corresponding to paid employer’s social contributions.

Russia also imposes a number of other taxes and special beneficial tax regimes as well, that may apply depending on the company’s business type and property owned in Russia. Some products, such as cigarettes, alcohol, etc., are subject to excise duties.

*Some regions of Russia have the right to establish reduced tax rates for certain types of businesses.

Types of Taxes in Russia

The below tax table shows the main taxes used in Russia.

Tax	Tax Rate	Tax Base	GST	SST
Corporate profit tax	25% (reduced tax rates, down to 0%, are applicable for certain categories of companies and activities)	Taxable incomes minus the amount of deductible expenses	+	–
VAT	– 20 % for goods and services (standard rate) – 10 % for basic foodstuff, medical goods, goods for children, etc. (reduced rate) – 0 % for export goods, international transportation services, etc. – No VAT for certain types of medical goods, license payments, etc.	Sales (including barter) of goods, works and services and transfer of property rights in Russia, Imports into Russia (VAT payable at customs can be returned from Tax office);   VAT is calculated and paid as the difference between output VAT (collected from clients) and input VAT (paid to suppliers).	+	-** For an annual turnover below 60 million RUB
Property tax	Up to 2,5% (the regions have a right to set a reduced rate)	Accounting or cadastral value of real estate	+	+
Transport tax	From 1 to 200 RUB per 1 HP (the regions have a right to set a reduced rate)	Engine power of vehicles and vessels	+	+
Land tax	Up to 1.5 % (the regions have a right to set a reduced rate)	Cadastral value of the land	+	+
Withholding tax	– Up to 15% for dividends and intercompany services – Up to 25% for other types of incomes – Tax rate may be reduced if there is an effective double tax treaty with Russia	Dividends, interest, royalties, sale of real estate, lease payments, intercompany services	+	+

Taxes on salaries

Tax	Tax Rate	Tax Base	GST	SST
Personal income tax	From 13% to 22% (progressive taxation system)	Income of employee (gross salary, bonuses, other remunerations, etc.)	+	+
Social contributions	15.1% / 30% (depends on an aggregated annual income of employee)	Income of employee (gross salary, bonuses, other remunerations, etc.)	+	+

**With incomes from 60 to 250 million rubles, VAT will be paid at a rate of 5%, and over 250 million rubles at a rate of 7%. At the same time, deductions of input VAT at such rates will not be applied. The special rate of 5% or 7% must be applied for at least 12 consecutive tax periods (quarters) in a row.

Personal income tax

Starting from January 1, 2025, a five-stage progressive personal income tax scale (general rates) is in effect for employees (Russian tax residents*). Each of the new rates will not apply to the entire income, but only to the amount exceeding the threshold level of the previous level.

Personal Income Tax Rate	Income per Year (in RUB)	Average Monthly Income (in RUB)
13%	up to 2,4 million	up to 200,000
15%	from 2,4 up to 5 million	from 200,000 to 416,700
18%	from 5 up to 20 million	from 416,700 up to 1,67 million
20%	from 20 up to 50 million	from 1,67 up to 4,17 million
22%	from 50 million	from 4,17 million

Example

Ivan’s salary is 600,000 RUB/month gross (before personal income tax is deducted).

From January to April (inclusive), Ivan will earn 600,000 rubles x 4 months = 2,400,000 rubles (before tax deduction). For this period, the personal income tax remains at 13%.

From May, Ivan’s income will exceed the first threshold of 2,400,000 rubles. The personal income tax rate for Ivan will increase to 15% and remain at this level until August inclusive.

In September, Ivan’s income from the beginning of the year will exceed the second threshold of 5,000,000 rubles. This means that from September until the end of the year his personal income tax rate will be 18%.

Companies from which an employee receives income are obliged to calculate, withhold and remit personal income tax to the budget. Companies must withhold the calculated amount of tax directly from the employee’s income when the income is actually paid to the individual.

Personal income tax for non-residents* 

Category of employee	Personal Income Tax Rate
General tax rate for all non-residents (with some exceptions below)	30%
Citizens of the Eurasian Economic Union	13% – 22% progressive tax scale
Employees with HQS** status	13% – 22% progressive tax scale
Employees who work distantly	13% – 22% progressive tax scale

Passive income sources such as dividends, deposit interest, securities transactions, and property sales are to be taxed at 13% for amounts up to RUB 2.4 million, with the rate rising to 15% beyond this limit.

*Tax residency status is determined by the duration of stay in the Russian Federation during the past 12 months. A resident is a person who stays in Russia for a total of more than 183 days during the past 12 months.

** HQS – Highly qualified foreign specialist with a gross salary of at least RUB 750,000 per quarter. Regardless of whether the HQS is a tax resident or not, taxation for him corresponds to the general rates (progressive tax scale).

Social contributions

Social security contributions are salary taxes imposed on Russian employers. Social contributions are paid at the expense of the employer and may not be withheld from the individual’s income. Tax rate (%) depends on the accumulative gross salary (including bonuses and other incentives) earned by employee within the year and employee’s status. If the accumulative gross salary of employee does not exceed the maximum base, then tax rate applied is 30%. All earnings above the maximum base are subject to 15.1% tax. Starting from 2025, the maximum base for social contributions is RUB 2,759,000.

The contribution rates for the company are:

• 30% on income not exceeding the maximum base (< RUB 2,759,000)
• 15.1% on income exceeding the maximum base (> RUB 2,759,000)
• 0% for all employees with HQS status

A reduced 15% rate of insurance contribution is provided to small and medium-sized businesses, if they meet the certain conditions.

Payments to expatriates holding Highly Qualified Specialist (HQS) work permits are not subject to social contributions, as these categories of individuals are not considered as insured within the Russian social security system.

In addition to the social contributions, all employers are required to pay insurance contributions against workplace accidents and occupational illnesses. The rate of these contributions depends on a company’s economic activity and may vary from 0.2% to 8.5%. The rate is generally 0.2% for most office employees.

Tax benefits for small and medium enterprises (SMEs)

Criteria for SME:

• Annual turnover up to 2 bn RUB
• Number of employees up to 250 people
• More than 51% of the company’s share capital is owned by individuals or SMEs. A company with foreign participation can also obtain the SME status. To do that, the Russian auditor should conduct an audit and confirm that the company’s foreign participant meets certain criteria for revenue and headcount.

Main tax benefits for SMEs:

• Reduced tax rate of social contributions — 15% (instead of 30%)
• Subsidies, grants, preferential loans
• Limitation of scheduled tax audits
• Priority rights in state tenders, etc.

To have all the benefits valid, the company should confirm its SME status annually.