Russia Tax Regime

The Russian Federation levies taxes at three levels — federal, regional (subjects of the Federation) and local (municipal) — under a single codified statute, the Tax Code of the Russian Federation (Parts One and Two). The Federal Tax Service (FNS) administers assessment and collection, operating one of the more digitally advanced tax administrations globally, with pre-filled returns, a unified taxpayer 'single tax account' (edinyy nalogovyy schet) settlement mechanism introduced in 2023, and extensive electronic filing. The principal taxes for business are the corporate profit tax (nalog na pribyl), value added tax (NDS), insurance contributions on payroll, and property taxes; individuals are subject to personal income tax (NDFL) and a range of property and transaction taxes.

The period covered by this handbook is dominated by the most significant fiscal reform in over a decade. Effective 1 January 2025, the headline corporate profit tax rate rose from 20% to 25%, and a genuinely progressive five-band personal income tax scale (13% to 22%) replaced the previous two-rate structure. A further round of measures took effect on 1 January 2026, most notably an increase in the standard VAT rate from 20% to 22% and a sharp tightening of the simplified-regime VAT exemption threshold. These changes are attributed to the need to fund elevated expenditure and offset lower hydrocarbon revenue.

The international dimension of Russian taxation has been reshaped by geopolitical developments. In August 2023 Russia suspended the substantive provisions of its double tax treaties (DTTs) with jurisdictions it designates 'unfriendly' — a list of some 38 states including the United States, the United Kingdom, Japan and most European Union members. The articles that mechanically prevent double taxation remain nominally in force, but the operative provisions delivering reduced withholding rates and permanent-establishment protections are suspended. Separately, a number of counterparties (including the United States) have suspended their side of the relevant treaty from 2024. This handbook describes rates and rules on a strictly factual, neutral basis; sanctions, counter-sanctions and capital-control measures materially affect cross-border structuring and are flagged where relevant.

Figures in this handbook are stated for tax years (TY) 2025 and 2026 and reflect the Tax Code of the Russian Federation and Federal Tax Service guidance as of July 2026. Amounts are in Russian rubles (RUB) unless stated otherwise. Readers should confirm position-specific treatment against current legislation and any applicable treaty, given the pace of change in this jurisdiction.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Rate and budget allocation

The standard corporate profit tax rate is 25% from 1 January 2025, an increase from the 20% rate that applied through 2024. The rate is administratively split between budgets: 8% is credited to the federal budget and 17% to the budget of the region where the taxpayer operates, a split expected to hold until 2030. Regions retain limited authority to reduce their portion for specified categories of investor (for example, participants in regional investment projects or residents of special economic zones and territories of advanced development), subject to federal constraints on such reductions.

Resident companies — broadly, entities incorporated in Russia and foreign entities managed from Russia or treaty-resident there — are taxed on worldwide profit. Foreign companies without a Russian presence are taxed only on Russian-source income, generally by withholding; those operating through a permanent establishment (PE) are taxed on the profit attributable to that PE at the standard rate. The taxable base is accounting profit adjusted under the Tax Code, with detailed rules on deductibility, depreciation, provisions and loss carry-forward. Tax losses may be carried forward indefinitely, but through the end of 2030 the amount of prior-year losses that may offset the current-year base is capped at 50% of that base — a restriction that has been repeatedly extended.

Sector incentives and investment reliefs

Accredited information-technology companies benefit from a concessional profit tax: rather than the general 25%, they apply a 5% federal-budget rate (0% regional) for 2025 through 2030, after which the standard rate is scheduled to apply. Eligibility depends on FNS accreditation and a qualifying-revenue threshold (broadly at least 70% of revenue from qualifying IT activity). Reduced or zero rates also apply to certain other activities, including qualifying agricultural producers, medical and educational organisations, and residents of the Skolkovo innovation centre and various special zones.

To encourage capital investment, Russia offers a federal investment tax deduction (federalnyy investitsionnyy nalogovyy vychet) alongside the longer-standing regional investment tax deduction. These allow qualifying capital expenditure to reduce the profit tax liability directly (within statutory limits) rather than only through depreciation. In addition, an enhanced deduction with an increasing coefficient is available for expenditure on qualifying high-technology equipment and Russian-registered software and databases, reflecting an import-substitution policy emphasis.

Illustrative corporate rates

Residency

An individual is a Russian tax resident for a calendar year if physically present in Russia for at least 183 days within any rolling 12-month period (assessed at year-end for the annual liability). Residents are taxed on worldwide income; non-residents are taxed only on Russian-source income. Residency turns on days of presence, not citizenship or domicile — a point of practical importance for the large population of Russian nationals working abroad, whose foreign employment income can fall outside the Russian net once residency is lost, subject to specific rules for remote workers engaged by Russian employers.

The progressive scale from 2025

From 1 January 2025 a five-band progressive scale applies to most income of residents (principally employment and business income). The rates are 13%, 15%, 18%, 20% and 22%, each applied only to the portion of annual income falling within its band, so a taxpayer's marginal rate rises with income while lower slices remain taxed at lower rates. The scale replaces the earlier structure under which most income was taxed at 13% with a single 15% surcharge above RUB 5 million.

A separate, gentler two-rate scale of 13% / 15% (with the 15% rate applying above RUB 5 million per year) is retained for certain categories of income, including dividends, interest on bank deposits, gains on the sale of securities and real property, and income of participants in the military operation and certain northern/hardship allowances. Dividends received by resident individuals are therefore taxed at 13% up to RUB 5 million and 15% above, rather than under the main 13%-22% scale.

Non-residents and withholding

Non-resident individuals are generally taxed at a flat 30% on Russian-source income, though a 15% rate applies to dividends from Russian companies and reduced 13%/15% treatment applies to certain categories such as highly qualified specialists, EAEU nationals employed in Russia, and remote workers of Russian employers. Employment income is collected primarily through employer withholding (the employer acting as tax agent), and most employees have no filing obligation; individuals with business income, foreign income, capital gains or other reportable items file an annual return (form 3-NDFL). Standard, social, investment and property deductions are available to residents, subject to caps and documentation.

Domestic withholding on outbound payments

Russian-source income of foreign companies without a PE is subject to withholding tax collected by the Russian payer as tax agent. The principal domestic statutory rates are 15% on dividends, 25% on interest, and 25% on royalties and most other passive and services income within the Tax Code's list of taxable Russian-source items. A 25% rate also applies broadly to income such as rental of movable property and certain freight/leasing income, while gains on the sale of shares in 'property-rich' Russian companies (those deriving more than 50% of value from Russian immovable property) are taxable in Russia. These are the rates that apply before treaty relief.

Impact of treaty suspension

Russia's network of double tax treaties historically reduced these withholding rates substantially — often to 5%-10% on dividends and 0% on interest and royalties for qualifying recipients. By Presidential Decree in August 2023, Russia suspended the substantive articles (including those on business profits, PE, dividends, interest, royalties and independent services) of treaties with jurisdictions it designates 'unfriendly'. In practice, this means the reduced treaty rates are no longer applied to payments to residents of those states, and domestic rates apply in full; treaties with jurisdictions not on the list continue to operate normally. Counterparties have responded variously — for example, the United States suspended operation of the relevant treaty provisions from 2024. Where a treaty remains in force and applicable, standard relief mechanics (beneficial-ownership substantiation and residency certification) continue to be required.

Withholding tax to non-residents rose in effective terms from 2025 both because the underlying profit-tax rate increased and because treaty relief has narrowed. Payers should confirm the applicable rate case by case, verify the recipient's jurisdiction status ('friendly' vs 'unfriendly'), and retain documentation supporting any relief claimed.

Transfer pricing

Russia applies OECD-aligned transfer pricing rules to 'controlled transactions', principally cross-border dealings between related parties and certain transactions with residents of low-tax or 'offshore' jurisdictions, above monetary thresholds. Taxpayers must use one of the recognised methods (comparable uncontrolled price, resale minus, cost plus, transactional net margin, profit split) to demonstrate arm's-length pricing, prepare local documentation and file annual notifications of controlled transactions. The rules were significantly tightened from 2024: penalties for pricing adjustments were increased, the concept of a secondary adjustment (treating an understated cross-border profit as a deemed dividend subject to withholding) was introduced, and the list of offshore jurisdictions was expanded. Country-by-country reporting applies to qualifying multinational groups.

Controlled foreign companies

Under the CFC regime, Russian tax-resident controlling persons (broadly, holders of more than 25%, or more than 10% where Russian residents collectively hold more than 50%) must include the retained profit of controlled foreign companies in their Russian tax base, subject to exemptions (for example, for active businesses, entities in EAEU states, or those with an effective foreign tax rate at least 75% of the Russian rate). Controlling individuals may alternatively elect a fixed-profit CFC regime paying a set annual amount irrespective of actual CFC profit. CFC notifications and profit reporting carry their own deadlines and substantial penalties for non-compliance.

Thin capitalisation, GAAR and unfriendly-jurisdiction measures

Thin-capitalisation rules restrict the deduction of interest on 'controlled debt' from foreign related parties (and certain guaranteed debt) where the debt-to-equity ratio exceeds 3:1 (12.5:1 for banks and leasing companies); excess interest is reclassified as a non-deductible dividend subject to withholding. A statutory general anti-avoidance rule (Article 54.1 of the Tax Code) denies tax benefits where the primary purpose of a transaction is tax avoidance, where a transaction lacks business substance, or where the counterparty did not in fact perform the obligation; the FNS applies it actively, supported by a beneficial-ownership ('actual right to income') test for treaty and reduced-rate claims.

Beyond the treaty suspensions, Russia has introduced a series of measures targeting or responding to 'unfriendly' jurisdictions and outbound flows, including restrictions and special-consent requirements on transactions with related non-residents, exit-transaction rules affecting disposals by such parties, and adjustments to withholding practice. A domestic minimum top-up tax and other measures reflecting international minimum-tax concepts were among the 2026 reform package; groups within scope should assess the interaction with Pillar Two rules of other jurisdictions. Given the fluidity of this area, all cross-border positions warrant current, jurisdiction-specific verification.

Value added tax

VAT (NDS) is the principal indirect tax. The standard rate rose from 20% to 22% with effect from 1 January 2026 (it was 20% throughout 2025). A reduced 10% rate applies to socially significant goods including basic foodstuffs, children's goods, medicines and certain printed matter, and a 0% rate applies to exports and qualifying international services. VAT operates on the standard input-output credit mechanism with monthly electronic invoicing (the FNS's ASK NDS system automatically cross-matches supplier and customer declarations). A notable 2026 change sharply lowered the revenue threshold at which businesses on the simplified tax system become liable to charge VAT — from RUB 60 million to RUB 10 million of annual revenue (phased via RUB 20 million in 2026 and RUB 15 million in 2027), drawing many more small businesses into the VAT net.

Excise, property and payroll levies

Excise duties apply to alcohol, tobacco and related products, motor fuel, passenger vehicles and certain other goods, with rates set in the Tax Code and periodically indexed. Corporate property tax is levied by regions on immovable property, generally on cadastral or book value; the standard maximum rate is 2.2%, but from 2025 regions may set rates up to 2.5% for high-value real estate (cadastral value above RUB 300 million). Land tax (local) is generally capped at 0.3% for agricultural and residential land and 1.5% for other land, with a raised ceiling of up to 1.5% permitted for very high-value parcels from 2025. Individuals pay personal property tax, land tax and transport tax administered locally/regionally.

Employers pay insurance contributions (social, pension and medical) under a unified tariff. The combined rate is 30% on remuneration up to the annual single base cap, and 15.1% on remuneration above the cap. The single base cap is RUB 2,759,000 for 2025 and RUB 2,979,000 for 2026. Reduced aggregate rates apply to qualifying small and medium enterprises (on the portion of monthly pay above the minimum wage) and to accredited IT and certain other sectors. A separate contribution for accident and occupational-disease insurance (typically 0.2%-8.5% by risk class) is payable in addition.

The Federal Tax Service (FNS) administers federal, and much of regional and local, taxation through a heavily digitised infrastructure. Since 2023, taxpayers settle most obligations through a single tax account (ENS) into which a unified tax payment is made and from which the FNS allocates funds across liabilities by statutory priority — a change that simplified payment but altered how offsets, refunds and arrears are tracked. Electronic filing is mandatory for VAT and for larger taxpayers across most taxes, and the FNS operates real-time analytical systems (notably ASK NDS for VAT) that automatically flag mismatches.

Two principal audit types exist: desk (in-house) audits of each filed return, and field (on-site) audits, which are risk-selected and can cover up to three preceding years. The FNS publishes risk criteria used to select taxpayers for field audits, encouraging voluntary compliance. Tax-monitoring — a cooperative-compliance regime giving the FNS real-time access to a large taxpayer's accounting systems in exchange for reduced audit exposure and advance rulings — is available to qualifying large companies and its thresholds have been progressively lowered.

Disputes follow a mandatory administrative pre-trial procedure: a taxpayer must first appeal an assessment to a higher tax authority before litigating. Unresolved matters proceed to the commercial (arbitrazh) courts, with appeal to appellate and cassation instances and ultimately the Supreme Court. Interest and penalties accrue on underpayments, and Article 54.1 anti-avoidance findings are a frequent feature of contested assessments. Advance pricing agreements are available for transfer pricing, though access for taxpayers connected to 'unfriendly' jurisdictions has been affected by wider restrictions.

Russia operates on a calendar tax year. Corporate profit tax is settled through advance payments during the year, with an annual return and final settlement after year-end. VAT is filed quarterly but paid in monthly instalments. Personal income tax is largely collected at source by employers acting as tax agents, with self-assessed items reported on the annual 3-NDFL return. Key recurring deadlines are summarised below; taxpayers should confirm exact dates each year, as weekend/holiday shifts and legislative amendments apply.

Common vehicles for inbound investment are the limited liability company (OOO) and the joint-stock company (AO); representative and branch offices of foreign companies are also used but carry PE exposure. Company formation and tax registration are largely digital through the FNS, and a Russian tax identification number (INN) is required for both entities and individuals. Statutory accounting follows Russian standards (RAS/FSBU), which differ from IFRS; larger and listed entities may also report under IFRS.

Since 2022, cross-border activity has been heavily shaped by sanctions imposed by numerous states, Russian counter-measures, and capital-control rules. Practical constraints — stated here factually and neutrally — include special government-commission consent requirements for many transactions involving parties from 'unfriendly' jurisdictions (including disposals of Russian assets), restrictions and 'type-C' account mechanics affecting dividend and other payments to such non-residents, currency-repatriation and conversion rules, and correspondent-banking and payment-routing frictions. These sit alongside the tax measures described above and can be decisive for deal feasibility, cash repatriation and exit.

Investors should also weigh the pace of legislative change evidenced by the 2025 and 2026 reform packages, the narrowing of treaty relief, active enforcement of anti-avoidance rules, and the import-substitution incentive framework favouring domestic technology and manufacturing. Professional advice specific to the counterparties, jurisdictions and asset classes involved is essential, and all rates and thresholds should be re-verified at the time of any transaction.