Taxation in Russia
Planning to work in Moscow? Check out our guide to the Russian tax system, including information on your income tax liability while working in Russia.
Both foreign citizens working and companies engaging in business activities in Russia have to pay taxes. For a company, it is mandatory to register at a tax office if it intends to do business in Russia for more than 30 days a year. An employee must notify the tax office via his or her employer within 10 days of being employed.
A foreign citizen planning to work in Russia must have a work permit, and ID document and a migration card stating the place of residence while being employed. Employment is only allowed at the place of temporary residence.
The rate of personal income tax depends on the situation of the foreign citizen. Tax residents, people with a permanent residence permit in Russia, pay 13 percent personal income tax. A non-resident temporarily staying in Russia has to pay 30 percent. However, a non-resident can become a tax resident if he or she stays in Russia for not less than 183 days in the course of 12 successive months.
VAT in Russia is generally 18 percent, which is charged on assets and services in Russia, as well as on imports. Exports, however, are not subject to VAT.
For more information on taxes checkwww.worldwide-tax.com.
Declaring income tax (from Alinga Consulting)
You must declare your personal income in the following cases:
- Registered individuals who conduct business without forming a separate legal entity.
- Notaries and lawyers in private practice must declare income received for these activities.
- Individuals who have received remuneration through civil contracts with other individuals who are not tax agents must declare that income. This includes income from contracts for rental or leasing agreements.
- Individuals who have received sums for the sale of their own private property must declare that income.
- Individuals who are tax residents of the Russian Federation, but who received income from sources outside Russia, must file taxes on that income. Also, if an individual is not a tax resident or if an individual changes his tax status during the tax period from resident to non-resident and remains a non-resident until the end of the tax period, no declaration need be filed and no taxes are due concerning income received outside Russia, even income received prior to obtaining non-resident status.
- Individuals who have received income without a tax agent (such as an employer) withholding appropriate taxes (i.e. if the payment was made in kind and the individual did not receive any cash payments in the given tax period). They must declare the value of this income.
- Individuals who have received lottery winnings, or winnings from any other "games of chance". They must declare any such sums, no matter how large or small.
- Individuals who have earned income from their ownership of intellectual property rights must declare that income
- Individuals who have received gifts from private individuals who are not family members
Individuals who meet the requirements must file their declaration for the preceding tax period by 30 April at their local tax office. Declarations can be submitted by the taxpayer to the tax office personally or by a legally authorised representative, sent by mail or electronically.
Declarations must include the following documents as attachments:
- copy of all pages of passport;
- certificate from employer for income received outside the RF, which must indicate the specific date of each payment;
- a notarised power of attorney if an individual is submitting the declaration through a legally authorised representative;
- declaration and all support documentation for deductions, if the right to such is claimed.
Failure to file a tax declaration can result in the following sanctions:
- If the taxes are filed less than 180 days late, 5 percent of the tax owed for each full or partial month the declaration is late is charged. This fine may not total 30 percent of the total sum of taxes due and may not be less than 100 roubles.
- If the declaration is more than 180 days late, then 30 percent of the tax owed is charged, plus 10 percent for each full or partial month after the first 180 days.
If you wish to file deductions, they only apply to earnings subject to the 13 percent income tax rate. They are not applicable to taxes paid at any other rate. Declarations for tax deductions can be filed at anytime throughout the year.
You should keep copies of the payment documents and any other tax related documents. Also, after submitting a tax declaration, the taxpayer should contact the tax authority to check that there is no additional tax, fees, or fines owed.
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