Russia prepares to tighten taxes 

In brief

In detail 

• The general VAT rate is proposed to be increased from 20% to 22%. The reduced rate of 10% for certain goods will be retained.
• Abolition of VAT exemption for Russian software. The existing VAT exemption for the sale of rights to Russian software listed in the register of the Russian Ministry of Digital Development will be abolished.
• Minimum tax for multinational companies. A 15% minimum tax will be introduced for Russian members of multinational groups, being the Russian equivalent of the global OECD Pillar II initiative.

NB!: The "grandfathering clause" in existing Russian investment contracts will not apply and will not prevent from collection of the minimum tax.

• The 50% limitation on the carry-forward of losses will be extended until 2030.
• Restrictions for 'foreign agents'. It is proposed to abolish most corporate income tax exemptions and benefits for taxpayers designated as 'foreign agents' and for companies with their participation.

Individual Income Tax

• Exit from foreign companies. 5-years holding tax exemption will no longer apply to exits from foreign organizations or to the redemption of shares in such organizations.
• Restrictions for 'foreign agents'. For individuals designated as 'foreign agents', tax exemptions and benefits (e.g., on inheritance) will be abolished. A flat 30% tax rate will apply for all types of income.

Other Taxes and Tax Administration

• Indexation of excise rates and duties.
• Social contributions for IT companies will increase. 
• New obligations for foreign companies. Foreign companies that pay Russia-based individual contractors for online services will be required to register with the Russian tax authorities as tax agents.
• Tax payment deadlines. If a tax payment date falls on a non-working day, the tax must be paid on the preceding business day, rather than the following business day as is currently the case.
• Tax audits. Tax inspectors will be authorized to audit not only the previous three years but also tax periods within the current year (e.g., completed quarterly VAT periods).
• Property taxes. Starting from 2027, the Federal Tax Service will be authorized to independently determine transport tax, land tax, and corporate property tax for organizations.

What's Next?

We are closely monitoring the bill's progress through the State Duma and will keep you informed.