Taxation in Russia

A taxation system is a set of taxes and fees levied in accordance with established procedures.

The foundations of the current tax system (of the Russian Federation) were laid in 1992. At this time, a package of laws of Russia was adopted on certain types of taxes and fees, the basic principles of which were preserved.

The legislative basis for building the tax system of the Russian Federation is the Tax Code, as well as federal laws on taxes and fees adopted in accordance with it and legislative acts of the constituent entities of the Russian Federation.

Types of taxation systems

Main types of taxation systems (regimes) in the Russian Federation:

General taxation system (GTS). Provides for the payment of the largest amount of taxes: income tax paid by legal entities, personal income tax for individual entrepreneurs and individuals, (VAT) value added tax, insurance premiums and other taxes. The traditional system is mandatory for those taxpayers whose conditions do not fit any taxation system or who have not decided to use other taxation systems.

Simplified taxation system (STS). Part of the “traditional” taxes is replaced by a single tax. To apply it, the conditions for carrying out business activities must comply with the rules and restrictions defined by law.

Unified agricultural tax (USAT). Organizations and individual entrepreneurs who are agricultural producers and have switched to paying the unified agricultural tax in the manner established by chapter 26.1 of the Tax Code of the Russian Federation. According to paragraph two of article 346.2 of the Tax Code of the Russian Federation, one of the conditions for the application of the unified agricultural tax is the production and processing of agricultural products. The object of taxation of the unified agricultural tax is income reduced by the amount of expenses. The procedure for determining and recognizing income and expenses is determined by Article 346.5 of the Tax Code of the Russian Federation. The tax rate is set at six percent.

Patent taxation system (PTS). Individual entrepreneurs in relation to certain types of activities involving a patent, which replaces the payment of tax on income received by an entrepreneur for a certain period (from 1 – 12 months inclusive, but within a calendar year). The Tax Code establishes the conditions and restrictions for the use of PSN .
Professional income tax (PIT). An experimental tax system for self-employed citizens and individual entrepreneurs, valid until 2029. The tax rate is 4% when calculating sales to Russian and foreign individuals and 6% when calculating sales to Russian and foreign organizations, as well as individual entrepreneurs. To apply for this tax system, certain conditions must be met.

From 1998 to 2020, there was also a taxation system in the form of a single tax on imputed income (UTII).

Tax legislation also does not prohibit mixed taxation; that is, the use of more than one tax regime simultaneously by one taxpayer. For example, it is allowed, along with the traditional taxation system, to apply a single tax system on imputed income for certain types of activities.

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