The Russian word for tax is "налог" (nalog), and the current tax system in Russia is based on a code that was enacted and adopted in three stages from 1998 to 2003. Over the past decade, a series of reforms have been implemented, resulting in taxes accounting for approximately 10.8% of the country's GDP as of 2019.

For individuals living in Russia, their tax position is determined by their residency status. This status determines which elements of their income are subject to tax and the corresponding tax rates. To provide a comprehensive overview of the tax system in Russia, the following sections are included:

1. Governing Authority: The country's tax authority, known as the Federal Tax Service of Russia, falls under the governance of the Ministry of Finance. This authority is responsible for managing and collecting taxes in Russia.

1. Tax Year: The Russian tax year begins on 1st January and ends on 31st December, aligning with the standard calendar year.

1. Tax Returns: Individuals are required to submit their tax returns to the Federal Tax Service using a form called the Tax Declaration (Налоговая Декларация, Nalogovaya Deklaratsiya). It is important to note that these returns must be filed by 30th April.

1. Payment Deadline: The final deadline to pay taxes in Russia is 15th July. It is essential to ensure that taxes are paid within this timeframe to avoid any penalties or fines.

By adhering to the above guidelines and understanding the various aspects of the Russian tax system, individuals can fulfill their tax obligations in a timely and accurate manner.

The official website of the Federal Tax Service offers some information in English, albeit with more extensive resources available in Russian. In 2021, the Russian government introduced a progressive tax system, which applies rates of either 13% or 15% to individuals earning over 5 million rubles annually. Non-residents, depending on their employment status and the origin of their income, are subject to tax rates of 13%, 15%, or 30%. It is worth noting that these rates may undergo changes for individuals who have left the country in response to the Russian invasion of Ukraine.

Russia's Tax Code outlines three tiers of taxation: federal, regional, and local. Currently, federal taxes encompass a range of levies, such as value-added tax (VAT), mineral extraction tax, individual income tax, unified social tax, corporate profits tax, excise taxes, special tax regimes, and various other taxes. Conversely, regional and local taxes in Russia primarily focus on assets. Regional taxes include corporate property tax, vehicle tax, and gambling tax, whereas local taxes consist of the land tax and individual property tax.

Starting from 2019, a Value Added Tax (VAT), known as налог на добавленную стоимость (nalog na dobavlennuyu stoimost – НДС) in Russian, is implemented at a standard rate of 20% when purchasing goods and services in Russia. However, there are certain items that qualify for a lower VAT rate of 10%, including food, shoes, certain medical items, and children's clothes.

It is worth noting that some essential items such as education, medical supplies, public housing, and traditional financial products are exempt from VAT altogether. This means that these items do not attract any additional tax.

It is important to mention that Russian VAT is applicable to imports, but it is typically not imposed on exports. When purchasing goods in Russia, the VAT is always included in the price, which means that customers do not need to pay it separately.

Visitors to Russia have the option to obtain a refund on the VAT paid for eligible purchases. However, it is not possible for residents of Russia or citizens of the Eurasian Economic Union (EEU) countries, which include Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, to claim this refund.

To be eligible for a VAT refund, visitors need to shop at selected retailers that are officially communicated by the Ministry of Industry and Trade (Министерство промышленности и торговли Российской Федерации, also known as Минпромторг, Minpromtorg). The minimum purchase amount required to be eligible for a refund is 10,000 рубles per retailer per day. The refund rate varies depending on the retailer and is subject to different rates as specified by the Ministry of Industry and Trade.

To obtain a VAT check or refund form, kindly request it from the store where you made your purchases. Once you have the form, it is necessary to have it stamped by a customs officer at the airport or port from which you will be departing. During this process, the officer may ask to see your ticket, purchase receipts, and may even inspect the items you have bought. It is important that the items have their original tags or labels intact.

After receiving the customs stamp, you can proceed to a designated VAT refund office or agency in order to receive your refund. The refund can be provided either in cash or credited back to your credit card. In Russia, several agencies are authorized to refund VAT taxes, including Premier Tax Free, Global Blue, National Operator Tax-Free, and Hi Sky.

Please note that if you are leaving Russia but traveling within the Eurasian Economic Union (EEU), you will not be eligible to claim a VAT refund.

Additionally, it is important to be aware that any foreigner who receives income from a Russian source is required to pay personal income taxes in Russia. However, if you reside in the country for more than 183 days per year and hold a Russian residency permit, your tax liabilities are generally lower compared to those of non-residents.

Personal income tax is applicable to individual businesses such as freelancers, contractors, and consultants, regardless of whether their income is derived from Russia or from abroad. International corporate organizations, on the other hand, are subject to a flat tax rate of 20% on their profits, along with withholding tax.

Even if a tax resident of the Russian Federation only earns income from outside of Russia, they are still required to pay Russian taxes on that income. However, if an individual becomes a non-resident during the tax year and maintains this status until the end of the tax period, they are exempt from filing a tax declaration and are not obligated to pay taxes on income earned outside of Russia, even if it was received prior to obtaining the non-resident status.

There are certain situations in which Russian taxes may be applicable. Expatriate residents in Russia can offset their Russian tax liabilities by claiming a foreign tax credit, provided they are covered by a relevant Double Taxation Treaty (DTT). Russia has signed DTTs with more than 80 countries. It is important to note that the foreign tax credit cannot exceed the amount of tax payable in Russia.

To claim the tax credit, individuals must submit supporting documents along with their tax declaration within three years after the reporting period. It is important to note that since 2018, Russia has implemented the Automatic Exchange of Information (AEOI) system, which enables the government to gather information on bank accounts held by Russian citizens or residency permit holders worldwide.

However, in light of the February 2022 invasion of Ukraine by Russia, several countries, including the UK and Switzerland, have suspended their tax cooperation with Russia. Consequently, specific exemptions for foreign pension income are not provided in Russia. As a result, tax residents are required to pay Russian income tax on their foreign pensions, even if the money is remitted to Russia.

It is worth mentioning that Russia does not have wealth and net worth taxes. Therefore, no tax is applicable when inheriting a foreign pension or receiving it through a transfer. However, if the heir is a Russian tax resident, they would be obligated to pay taxes on the income derived from a foreign pension scheme and potential profits from the pension vehicle.

In Russia, residents do not receive tax relief on contributions made to a foreign pension scheme. The tax rates for individuals depend on their tax residency status and the type of income they earn. As of January 2021, tax residents are subject to a 13% tax rate on their annual income up to 5 million p. Any income exceeding this limit is taxed at a rate of 15%. Non-residents, on the other hand, are taxed at a flat rate of 30% on any income sourced from Russia.

Self-employed individuals in Russia pay taxes based on their turnover, with rates ranging from 4% to 6%. When it comes to filing taxes, joint returns are not possible in Russia.

For individuals who hold official residency in Russia, various types of income are subject to income tax at either 13% or 15%. This includes salary income, dividend income, rental income from property, foreign exchange gains, and gains from exercising stock options.

Starting from January 2021, both residents and non-residents are required to pay a 13% income tax on any interest earned from deposits that exceed 1 million p., multiplied by the Bank of Russia key rate.

If you are employed in Russia, your employer is responsible for registering your taxable income with the Russian tax authorities and withholding the appropriate amount of tax from your salary.

Expatriates who receive income in the form of benefits typically pay tax based on the market value of the benefit. It is important to note that this is a general rule and specific circumstances may vary.

In Russia, individuals who spend less than 182 days a year in the country are considered non-residents for tax purposes. As a non-resident, you are required to pay personal income taxes at a general flat rate of 30% on any income generated within the Federation. This includes income from activities and services performed in Russia, regardless of the location of the paying entity. It also includes remuneration for directors of Russian companies, interest, and income from property located in Russia.

Dividend income from Russian companies, however, is taxed at a lower rate of 15%.

It's important to note that non-residents will be subject to the 30% tax rate for the first 183 days, even if they are on a 12-month contract. However, if you receive official residency or stay longer than 183 days, you can reduce your tax liability to the progressive Russian tax rate. Any over-payment made during the interim period can be recouped.

There are certain cases where foreign non-residents may be eligible for the Russian progressive tax rate. This generally applies to nationals of EEU member countries who are working in Russia. Additionally, nationals of other countries who are Highly Qualified Specialists may also qualify for the 13% or 15% tax rate. Highly Qualified Specialists typically have significant work experience, skills, or accomplishments in a specific field and receive a monthly salary of at least 167,000 p.

Overall, it's important for non-residents in Russia to be aware of their tax obligations and consider their eligibility for reduced tax rates if they meet the necessary criteria.

With a few exceptions, individuals in Russia have several options for filing their tax returns. The most convenient method is through an online platform, although it is also possible to make payments in person at a Russian tax office or through a local bank account. Alternatively, one can engage the services of an authorized company and pay an administration fee for assistance with the filing process.

It is important to retain copies of payment documents and any other tax-related paperwork for a period of up to four years. Furthermore, taxpayers have the opportunity to contact the Russian tax authority after submitting their tax declaration in order to verify if there are any outstanding taxes, fees, or fines. When completing the tax declaration, certain documents may need to be attached.

Accounting documentation and tax returns can be filed online, at a tax office, or through authorized operators. However, it should be noted that the option to electronically file tax returns directly to the tax authority using specialized software is only available to high-earning taxpayers. This feature is not accessible to the general public or small to medium-sized businesses.

In accordance with the tax laws in Russia, it is necessary to retain relevant documents for a minimum of four years in order to calculate and pay taxes. It is estimated that around 3.55 million individuals were self-employed in Russia in 2021. If you fall under this category, it is important to note that you will still be subject to the progressive income tax rates of either 13% or 15%.

Foreign individuals holding temporary or permanent residence permits have the opportunity to register as an individual entrepreneur (known as "индивидуальный предприниматель" or "individualny predprinimatel") or IP (ИП). Different tax rates are applicable in this case.

Starting in 2022, Russia has introduced a new experimental tax regime in specific regions, including Moscow, Kaluga Oblast, and the Republic of Tatarstan. This regime offers a choice for corporate and entrepreneurial taxpayers to be taxed at either 8% of their income or 20% of their income minus expenses. The trial period for this regime is expected to continue until 2027, and businesses with an annual taxable income of less than 60 million p. and fewer than five employees are eligible to participate.

Official residents have the opportunity to reduce their Russian income tax obligations by utilizing deductions and allowances, which are typically not available to non-residents.

Hence, deductions under the progressive Russian tax rate are limited to earnings and do not apply to taxes paid at different rates. You have the flexibility to submit declarations for tax deductions at any time throughout the year. There are various situations in which deductible expenses can be claimed, such as when purchasing property, paying tuition fees, receiving medical treatment, or making charitable contributions.

The primary deduction for income taxes in Russia is related to children. This exemption begins at 1,400 p. for the first two children and increases to 3,000 p. for a third child and each additional child. The location of the children is not a factor when applying for this tax deduction. However, in order to qualify for the child tax deduction, your total annual income must be less than 350,000 p.

Furthermore, individuals can also deduct their own education expenses in licensed institutions, subject to certain limits. Similarly, deductions can be claimed for the education expenses of their children, up to a maximum of 50,000 p. per child.

Donations made to certain non-commercial organizations and charities in the UK are eligible for tax deductions. These deductions can be applied to taxable income, up to a limit of 25% of all income subject to a 13/15% tax rate. This provides individuals with an opportunity to support worthy causes while also reducing their tax liability.

When purchasing property in Russia, foreign tax residents have the option to apply for a one-time tax deduction. This deduction allows for a maximum of 2,000,000 p. Additionally, foreign tax residents can claim a deduction on the amount of interest paid, up to 3,000,000 p. This can provide significant tax savings for those investing in Russian real estate.

Both Russian nationals and foreign nationals are exempt from paying taxes when purchasing real estate or other assets in Russia. This means that individuals can freely buy apartments, country houses, garages, and even land for private housing or private subsidiary farming, with some restrictions in border areas, regions with special regimes, forests, nature reserves, and closed administrative areas.

It is worth noting that there are no net wealth or net worth taxes in Russia. However, Russian property tax is levied on property owners at a maximum rate of 2% of the property's value. The value of the property is determined as of 1 January each year. Normally, this property tax is paid annually as part of the individual's tax return application.

For further information regarding Russian property tax, it is advisable to consult the Russian tax authority. They will be able to provide detailed guidance on the specific rates and regulations applicable to individual circumstances.

It is important to mention that when it comes to land tax rates in Russia, there is a slight difference in comparison to other property taxes.

The Russian tax rate for land and property ownership is set by local authorities. In most cases, the rate is 0.3% of the land value, regardless of whether the land is used for housing or agriculture. However, for land used for purposes other than agriculture, residential, or utilities infrastructure, a tax rate of 1.5% may apply.

The payment process for this tax is similar to that of property tax.

When it comes to rental income, residents are taxed at a progressive rate, meaning the more income they earn, the higher the rate of tax they will pay. Non-residents, on the other hand, are subject to a flat tax rate of 30%, which is usually withheld at the source.

If rental income is received by an international legal entity that doesn't have a permanent organization in Russia, that entity is also subject to a holding income tax at a rate of 30% on the gross rental income.

Russia does not have a separate capital gains tax. Instead, gains made from selling property or assets are subject to income tax at the progressive rate. However, tax residents are eligible for a statutory exemption on all property sold during a calendar year. The exemption is limited to 1 million Russian rubles for real estate and 250,000 Russian rubles for other types of property.

In Russia, the import and export taxes primarily apply to energy products, ferrous and non-ferrous mineral ores, skins, and wood. However, certain merchandise such as transit goods, cultural valuables, and humanitarian aids are exempt from these taxes. When passing through Russian customs, all goods are subject to processing charges based on their value and quantity.

As a major oil producer, Russia offers some of the most competitively priced fuel globally. However, taxes on petrol and diesel range from 55% to 65%, although these percentages may vary. Departure taxes are not applicable in Russia, but the cost of your flight includes various other taxes and surcharges. The total amount of these fees can fluctuate depending on oil prices and government policies. To get a better idea of what you can expect to pay, it is recommended to visit the websites of airlines like Aeroflot.

If your contract ends or you plan to leave Russia in the middle of the tax year, you have the option to claim a departure tax return. To do so, you will need to file the necessary paperwork at least one month before your permanent departure from the country. It is important to note that personal Russian income tax should be paid within 15 days after submitting the tax return form.

In Russia, the tax system may initially seem straightforward, but it is important to note that there are numerous exceptions and deductions available to both resident and non-resident taxpayers. This fluidity within the tax system is further enhanced by additional exceptions, making it possible that some legal requirements may not be applicable in practice. Moreover, there is wide scope for interpretation when it comes to taxation. Therefore, it is highly recommended for expatriates residing in Russia to seek expert advice before making any financial decisions, as this will aid them in understanding the potential tax implications and help them finalize their tax returns with confidence.

For American expatriates living in Russia who are also concerned about meeting their tax obligations in the United States, Taxes For Expats specializes in providing assistance and support in this regard. This professional service can assist them in navigating the complexities of US taxes while living abroad, ensuring that they stay compliant with the relevant tax laws and regulations.