Russia does have one of the smallest income taxes in the world

Russia does have one of the smallest income taxes in the world

Our tax lawyer has prepared for you a brief information about the tax rates for individuals who are citizens in Russia.

According to article 207 of the tax code of the Russian Federation, individuals who are tax residents of the Russian Federation, as well as individuals who receive income from sources in the Russian Federation and are not tax residents of the Russian Federation, are considered taxpayers of personal income tax.

The object of taxation (article 209 of the tax code of the Russian Federation) is income received by taxpayers:

1. from sources in the Russian Federation and (or) from sources outside the Russian Federation – for individuals who are tax residents of the Russian Federation;

2. from sources in the Russian Federation – for individuals who are not tax residents of the Russian Federation.

When determining the tax base (article 210 of the tax code of the Russian Federation), all the taxpayer’s income received in monetary and in-kind forms, or the right to dispose of which he had, as well as income in the form of material benefits, is taken into account. If any deductions are made from the taxpayer’s income by order, court decision or other authorities, such deductions do not reduce the tax base.

The tax base is determined separately for each type of income for which different tax rates are set. The tax period is regulated by article 216 of the tax code of the Russian Federation and is a calendar year. Tax deductions under the tax to incomes of physical persons are divided into: standard, social, property and professional.

The basic tax rate is 13 %. It is also used for income:

  • from teaching and consulting.
  • from the sale or lease of a vehicle.
  • from the sale or lease of real estate.
  • from equity participation in the activities of organizations received in the form of dividends.
  • from lottery winnings, etc.

Some types of income are taxed at different rates:

35 %: if

  • the cost of any winnings and prizes received in competitions, games and other events for the purpose of advertising goods, works and services is more than 4,000 rubles;
  • interest income on deposits with banks in excess of the amount calculated based on the current refinancing rate of the Central Bank of the Russian Federation, increased by 5 points, on ruble deposits and 9 percent per annum on deposits in foreign currency;
  • amounts of interest savings when taxpayers receive borrowed (credit) funds in excess of a certain amount, with the exception of income in the form of material benefits received from savings on interest for the use of loans actually spent on new construction or on the purchase of a residential building, apartment or shares.

9 %:

  • receiving dividends until 2015;
  • receiving interest on mortgage-backed bonds issued before January 1, 2007.;
  •  income generation by the founders of the mortgage cover trust management. Such income must be obtained based on the purchase of mortgage participation certificates issued by the mortgage cover Manager before January 1, 2007.

15 %:

  • for non-residents in respect of dividends from equity participation in the activities of Russian organizations.

30 %:

  • applies to tax non-residents of the Russian Federation.

Foreign citizens engaged in employment with individuals on the basis of a patent shall pay tax on income received from such activities in advance upon receipt and renewal of the patent.

The tax is paid in the form of fixed advance payments in the amount of 1000 rubles per month. However, if the amount of tax calculated based on the income of a foreign citizen working on the basis of a patent exceeds the amount of advance payments paid, the missing part must be transferred by the foreign employee to the budget.

If you have any additional questions, you can consult our lawyer, including on taxes.

The lawyer will conduct a preliminary consultation online. And if necessary, if you are located in Moscow, you can meet with any lawyer in the office of our firm.