See If Your Business Qualifies for the Simplified Tax Regime

It’s complicated running a business in a foreign country. Fortunately, if your business in Russia meets the requirements of a small or medium-sized business, you can avoid the complicated tax system by taking advantage of a simplified code offered to just such businesses.

How Does a Business Qualify?

In order to be eligible for the simplified tax structure, your business must meet the following qualifications:

  • Seventy-five percent of the shares in your company must be held by an individual; no more than 25 percent may be held by another legal entity.
  • You do not have a branch or representative offices listed in the incorporation documents.
  • Your annual revenue does not exceed RUB 80 million (approximately USD $1.2 million).
  • Your value of tangible and intangible assets is no more than RUB 100 million (USD $1.5 million) annually.
  • You have no more than 100 employees.

If your business meets all of the above requirements, you can operate under a simplified tax structure.

What Is the Simplified Tax Regime (STR)?

Under the simplified tax regime, businesses can choose between paying a flat 15 percent tax rate on income minus expenses, or paying 6 percent on gross revenues. This regime replaces the following:

  • A corporate income tax rate of 20 percent.
  • A 2.2 percent property tax payable on fixed assets including computers, furniture, and equipment costing more than RUB 40,000 (USD 600) intended to last 12 months or more.

Companies acting under STR are not value-added tax payers. These terms are very attractive for small businesses and must be taken into consideration when you are planning the size and scope of your business entity in Russia

What Types of Businesses Are Ineligible?

Not all small companies can qualify for these terms, however. You may not act under the STR if you represent a:

  • Foreign legal entity
  • Branch or representative office
  • Russian subsidiary of a foreign country
  • Bank, insurance company, or investment firm

Jus Privatum Understands Russian Tax Law Better Than Anyone

While the simplified tax regime is meant to benefit small businesses, it can be difficult to determine whether you qualify. If you are eligible, you will want to take advantage of this attractive structure. Contact our office through the link on this page and we can answer all your questions about Russian tax law related to your business venture in Russia.

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