In this blog post, we provide an overview of the latest tax reforms proposed by the Russian government, set to take effect in 2025. These changes will impact personal income tax, corporate tax, the simplified taxation system, and state fees. Our goal is to help you understand how these reforms could affect you and your business. For expert guidance and services, Van Rhijn & Partners is here to assist.
On This Page
Personal Income Tax
Deductions Personal Income Tax Rates for Families With Kids
Corporate Tax
Planned Changes to the Simplified Taxation System in Russia
Amnest For ‘Business Fragmentation’
Reduced Contribution To Funds
Property Tax
Land Tax
Tourist Tax
Mineral extraction Tax (MET)
Conclusion
Personal Income Tax
Up until 2021 there was just a flat tax rate in Russia of 13%. This changed in 2021, when some progressiveness was introduced into the taxation system.
Tax Rates and Thresholds with Euro Equivalents As It Applies Since 2021
| Tax Rate | Income Range (Rubles) | Income Range (Euros) | Details |
|---|---|---|---|
| 13% | Up to 5,000,000 rub | Up to 52,200.29 EUR | Applies to the tax base (income) of individuals equal to or not exceeding 5 million rubles per calendar year. |
| 15% | Over 5,000,000 rub | Over 52,200.29 EUR | Fixed tax of 650,000 rubles (13% of 5 million) plus 15% of the amount exceeding 5 million rubles. (Fixed tax = 6,784.93 EUR) |
The Russian government is proposing to make the change to a more progressive tax system for personal income tax, which would entail the following rates:
Proposed Income Tax Rates and Thresholds with Euro Equivalents
Here is the updated table with the translated information and equivalent amounts in euros using the rate of 1 Euro = 95.7849 Rubles:
Extended Income Tax Rates and Thresholds with Euro Equivalents
| Income Tax Rate | Annual Income in Rubles | Annual Income in Euros | Monthly Income in Rubles | Monthly Income in Euros | Details |
|---|---|---|---|---|---|
| 13% | Up to 2,400,000 rub | Up to 25,056.14 EUR | Less than 200,000 rub | Less than 2,088.01 EUR | – |
| 15% | 2,400,000 – 5,000,000 rub | 25,056.14 – 52,200.29 EUR | – | – | – |
| 18% | 5,000,000 – 20,000,000 rub | 52,200.29 – 208,801.18 EUR | – | – | – |
| 20% | 20,000,000 – 50,000,000 rub | 208,801.18 – 522,002.95 EUR | – | – | – |
| 22% | Over 50,000,000 rub | Over 522,002.95 EUR | – | – | – |
| 15% | Over 5,000,000 rub (Special regions) | Over 52,200.29 EUR | – | – | 15% rate applies to income exceeding 5 million rubles for workers in the Far North and equivalent areas. |
| 15% | Over 2,400,000 rub (Specific income types) | Over 25,056.14 EUR | – | – | 15% rate applies to income from dividends, deposit interest, securities sales, and digital financial assets if income is 2.4 million rubles or more annually. |
Only about 3.2% of the working population in Russia earns more than 200,000 rubles per month. Consequently, some opinion makers suggest that the purpose of this measure is to foster a sense of justice among the populace, rather than to substantially increase state revenues.
Deductions Personal Income Tax Rates for Families With Kids
Starting in 2025, Russia plans to increase standard tax deductions for children. For the second child, the deduction will rise from 1,400 rubles to 2,800 rubles (29.23 EUR), and for the third and each subsequent child, it will increase from 3,000 rubles to 6,000 rubles (62.65 EUR). The threshold for total income eligible for these deductions will also increase from 350,000 rubles to 450,000 rubles (4,698.50 EUR). Additionally, a tax “cashback” mechanism for families with two or more children will be introduced, aimed at effectively reducing the personal income tax rate to 6%.
| Category | Current Amount (Rubles) | New Amount (Rubles) | Equivalent Amount (Euros) |
|---|---|---|---|
| Second Child Deduction | 1,400 | 2,800 | 29.23 |
| Third and Subsequent Child Deduction | 3,000 | 6,000 | 62.65 |
| Total Income Threshold for Deductions | 350,000 | 450,000 | 4,698.50 |
Tax Deductions for Children with Euro Equivalents
| Number of Children | Current Deduction (Rubles) | New Deduction (Rubles) | Current Monthly Tax Savings (Rubles) | Current Annual Tax Savings (Rubles) | New Monthly Tax Savings (Rubles) | New Annual Tax Savings (Rubles) | Current Monthly Tax Savings (Euros) Per Kid | New Monthly Tax Savings (Euros) Per Kid |
|---|---|---|---|---|---|---|---|---|
| 1 | 1,400 | 1,400 | 182.0 | 2,184.0 | 182.0 | 2,184.0 | 1.90 | 1.90 |
| 2 | 1,400 | 2,800 | 182.0 | 2,184.0 | 364.0 | 4,368.0 | 1.90 | 3.80 |
| 3 | 3,000 | 6,000 | 390.0 | 4,680.0 | 780.0 | 9,360.0 | 4.07 | 8.14 |
Corporate Tax
Starting in 2025, the corporate tax rate in Russia will increase from 20% to 25%. This adjustment aims to eliminate export duties on foreign exchange. Additionally, the tax rate for IT companies will rise from 0% to 5% for the years 2025-2030. A federal investment deduction will be introduced for organizations in priority sectors, and regions will have the authority to set reduced corporate tax rates for small tech companies during 2025-2030. A multiplying factor of 2 will be applied to expenses for acquiring exclusive rights and adapting/modifying Russian software, and the coefficient for R&D expenses will increase from 1.5 to 2. Regional investment projects will be made indefinite. Specific rules for the new federal investment deduction will be codified, including limitations on the amount that can be deducted and conditions for maintaining eligibility.
Table of Corporate Tax Changes
| Change | Current Rate | New Rate |
|---|---|---|
| Corporate Tax Rate | 20% | 25% |
| IT Companies Tax Rate | 0% | 5% |
| Multiplier for Exclusive Rights Expenses | 1 | 2 |
| Multiplier for R&D Expenses | 1.5 | 2 |
| Minimum Tax Rate after Federal Investment Deduction | – | 3% |
| Regional Investment Projects | – | Indefinite |
Planned Changes to the Simplified Taxation System in Russia
Starting in 2025, Russia will implement several significant changes to the Simplified Taxation System (STS). The revenue threshold during 9 months of the year during which a company wants to trasition to the special regime will increase from 112.5 million rubles to 337.5 million rubles (approximately 3,524,992.18 EUR).
The maximum number of employees allowed for STS application will rise from 100 to 130. The income threshold for using STS will be raised to 450 million rubles (approximately 4,698,503.13 EUR). Additionally, the threshold for the residual value of fixed assets will increase from 150 million rubles to 200 million rubles (approximately 2,088,086.19 EUR), indexed by the deflator coefficient. Taxpayers with annual incomes exceeding 60 million rubles (approximately 626,426.27 EUR) will be required to pay VAT, with an option to choose between standard VAT rates or reduced rates (5% for incomes from 60 million to 250 million rubles and 7% for incomes from 250 million to 450 million rubles).
The reduced VAT rates of 5% and 7% in the table below come with a catch: when applying them, you are not entitled to deduct incoming VAT from your outgoing VAT (the same way you cannot deduct any VAT when applying the STS without paying any VAT).
Those with incomes below 60 million rubles will be automatically exempt from VAT without needing to notify the tax authorities.
The increased rates of 8% for the “income” regime and 20% for the “income minus expenses” regime will be abolished, leaving the basic rates of 6% and 15%.
Changes to the Simplified Taxation System in a table
| Subject | Current Amount (Rubles) | New Amount (Rubles) | New Amount (Euros) |
|---|---|---|---|
| Income threshold for switching to STS (revenue for 9 months of the year in which the company wants to make the switch should be below this threshold, as defined in 346.12 paragraph 2 of the Russian Tax Code) | 112.5 million | 337.5 million | 3,524,992.18 |
| Average number of employees | 100 | 130 | – |
| Revenue threshold for applying STS | 265,8 | 450 million | 4,698,503.13 |
| Threshold for residual value of fixed assets | 150 million | 200 million | 2,088,086.19 |
| VAT payment required for revenue less than 60 million | 0 | 0 (unless exception applies) | |
| Reduced VAT rate for incomes from 60 million to 250 million | – | 5% | – |
| Reduced VAT rate for incomes from 250 million to 450 million | – | 7% | – |
| Simplified Tax Rates | – | ||
| Income minus Expenses | 6% (there was a higher rate of 8% for larger companies under STS, that is now being abolished) | 6% | – |
| Income | 15% (there was a higher rate of 20% for larger companies under STS, that is now being abolished) | 15% | – |
Please note that the Simplified Tax rates mentioned above are general rates. As discussed in our blog post about the Simplified Taxation System in Russia, many regions have opted for reduced STS rates in their areas.
Amnesty For ‘Business Fragmentation’
The various tax regimes with reduced rates in Russia often lead to abuse, as large companies split their businesses into smaller entities to benefit from these lower rates (taxation for large companies in Russia is significantly higher than for small ones). To combat this, the Russian government has introduced an incentive for companies using such prohibited structures to come clean and comply with the law moving forward.
A tax amnesty has been introduced for business fragmentation occurring in 2022-2024, provided that companies voluntarily cease such practices in 2025 and 2026. Under this amnesty, companies will be exempt from paying taxes, penalties, and fines for 2022-2024 if inspections in 2025 and 2026 confirm the cessation of business fragmentation.
Reduced Contribution To Funds
Starting in 2025, manufacturing enterprises in Russia that are in the register for small and medium sized business can benefit from lower employer compulsory contributions to the several funds , from 15% to 7.6%, provided they do not deal with certain excisable goods and meet income requirements. This rate will apply to to individuals who earn more than the minimum wage. Additionally, the reduced rates for specific payers, such as IT companies and organizations in the radio-electronics industry, will be extended until 2026.
Property Tax
From 2025, regional authorities will be able to set a rate of up to 2.5% for real estate with a cadastral value of more than 300 million rubles. Currently the maximum rate for the property tax is 2.2%, so that is a significant increase.
Land Tax
Starting in 2025, local authorities in Russia will be able to set a land tax rate of up to 1.5% for parcels with a cadastral value exceeding 300 million rubles, a significant increase from the current limit of 0.3%. However, the reduced rate of 0.3% will be maintained for agricultural land and land designated for defense, security, and customs purposes, regardless of their value.
Land Tax Rates for High-Value Land
| Year | Tax Rate for High-Value Land |
|---|---|
| 2024 | 0.3% |
| 2025 | 1.5% |
Tourist Tax
Starting in 2025, Russia will replace the resort fee with a new tourist tax, introducing a dedicated chapter in the Tax Code. Municipalities will decide on implementing the tax and its rate, and they can also set additional benefits. The tax will initially be 1% of the accommodation price in 2025, increasing by 1% each year until reaching a maximum of 5% in 2029. Municipalities can establish differentiated rates based on season and accommodation type, with a minimum tax rate in place. Certain groups, such as participants in special military operations, will be exempt from this tax, and municipalities can expand the list of exempt categories.
Changes to Excise Duties in Russia for 2025
Starting in 2025, Russia will introduce new excise duties on nicotine raw materials and non-tobacco nicotine-containing mixtures for heating, with gradual rate increases. Excise duties on nicotine raw materials will rise from 2.2 to 2.4 rubles per mg from 2025 to 2027, and for non-tobacco nicotine mixtures, from 925 to 1,000 rubles per kg. Additionally, excise duties on natural gas used for ammonia production will be calculated per 1,000 cubic meters using a special formula, and most excise rates on products like alcohol, cigarettes, vehicles, and diesel fuel will be indexed.
Mineral extraction Tax (MET)
Starting in 2025, Russia will increase the mineral extraction tax (MET) through higher rates and new coefficients. The tax rate for diamonds and other precious and semi-precious stones will rise from 8% to 8.4%, and a new coefficient, Kenergi, will be introduced for coal (excluding anthracite, coking, and brown coal). Additionally, the rates for various types of apatite ores will change to 1 ruble per ton, multiplied by a new coefficient, Kfr.
Changes to State Fees in Russia for 2025
Starting in 2025, Russia will increase state fees for the registration of rights and transactions involving high-value real estate. The fee amount will depend on the cadastral value of the property and whether the payer is an organization or an individual. Additionally, there will be increases in state fees for various other actions, such as marriage dissolution without children and changes to civil status records.
State Fees Changes
| Payer | Property Cadastral Value (Rubles) | Fee Rate | Maximum Fee (Rubles) | Equivalent Maximum Fee (Euros) |
|---|---|---|---|---|
| Organization | Over 22 million | 0.2% of cadastral value, but not less than 0.2% of the transaction price | 1 million | 10,441.54 |
| Individual | Over 20 million | 0.02% of cadastral value, but not less than 0.02% of the transaction price | 500 thousand | 5,220.77 |
Additional State Fees Changes
| Action | Current Fee (Rubles) | New Fee (Rubles) | Equivalent New Fee (Euros) |
|---|---|---|---|
| Marriage dissolution without children | 650 | 5,000 | 52.18 |
| Amendments to civil status records | 650 | 700 | 7.31 |
| Issuance of duplicate certificates (birth, marriage, death) | 350 | 500 | 5.22 |
| Registration of changes to lease agreements (individuals) | 350 | 700 | 7.31 |
| Registration of changes to lease agreements (organizations) | 1,000 | 2,000 | 20.88 |
Conclusion
The proposed tax reforms in Russia set to take effect in 2025 introduce significant changes across various tax categories, including personal income tax, corporate tax, simplified taxation systems, and state fees. Businesses and individuals should prepare for these changes and understand their implications. Van Rhijn & Partners can assist with any questions and services related to these new tax regulations, ensuring compliance and optimal tax strategies. Don’t hesitate to reach out to us for expert guidance and support.
