Doing Business in Russia
30 Doing Business in Russia
the PE of the FLE performing the
construction activities.
2 If a FLE acts in Russia through a
dependent agent. A dependent
agent is understood in Russian
legislation, as well as under the
applicable double tax treaty (if
any), as a company or individual
which, on the basis of contractual
relations with a principal, has and
habitually exercises the right to
conclude contracts and negotiate
the essential terms of contracts
in the name of the principal or to
bind the principal's participation
into a business activity (except for
activities which are of an auxiliary
or preparatory nature, such as
marketing).
Generally, the approach to calculating
profits tax for the permanent
establishments of FLES is similar to the
approaches established for Russian
legal entities, with certain exceptions.
FLES having no PE in Russia are subject
to withholding tax on income sourced
in Russia (for details, see the section
withholding income tax below, p.31).
Filing and payment
Taxpayers (except PEs and certain other
taxpayers) are allowed to file profits tax
returns either monthly or quarterly. PEs
should file profits tax returns quarterly.
An annual return is due by 28 March of
the year following the reporting year.
Taxpayers (except PEs) pay monthly
advance payments on profits tax. PEs
pay quarterly advance payments. Final
payments are due on 28 March of the
year following the reporting year.
Social Security Contributions
Social security contributions are
payable in Russia in the form of
mandatory insurance contributions
to the Russian Pension Fund,
Social Insurance Fund, and Medical
Insurance Fund for each employee
(personified contributions), as well
as via contributions for mandatory
social insurance against occupational
accidents and diseases.
Insurance contributions are levied on
companies, individual entrepreneurs
and individuals making payments
to other individuals as part of
employment relations and under
civil contracts for the provision of
services or the performance of work,
and under other specific types of
contract. Contributions are also levied
on self-employed individuals, including
individual entrepreneurs, notaries and
lawyers. No mandatory contributions
are payable by employees.
Payments subject to personified
contributions and rates
Insurance contributions are payable
on remuneration and other payments
to individuals under employment
and civil contracts. Some forms of
compensation are exempt from
insurance contributions, including
business trip expenses, temporary
disability allowances, employee
dismissal expenses (excluding
compensation for unused paid vacation
days), professional development
expenses, and some others.
For 2016, personified contributions
are payable at the rates provided in
the table below subject to an annual
remuneration threshold established
for contributions to the Pension Fund
and the Social Insurance Fund. The
threshold is subject to annual revision
by the Russian government.
Type of insurance
contribution
Annual threshold
per employee
Employers which operate hazardous
and dangerous places of work are
required to pay additional contributions
to the Russian Pension Fund. The rate
of the additional contribution varies
from 0% to 8%, depending on how the
working conditions are assessed during
a special assessment procedure. If the
employer does carry out an assessment
of its working conditions, the additional
contribution is payable in 2016 at the rate
of 9% or 6%, depending on the type of
employer.
A foreign national's contributions are
paid in full on the remuneration they
earn in Russia based on their Russian
permanent or temporary residence
permit.
An employer of foreign nationals who are
staying temporarily in Russia on a visa
must pay personal contributions to the
Pension Fund and to the Social Insurance
Fund (unless the employee is a HQS).
No personified contributions are payable
for HQS.
Personal contribution concessions
Reduced insurance contribution
rates apply to agricultural producers,
businesses in technology and
innovation special economic zones,
taxpayers applying the simplified tax
regime (for certain activity types), legal
entities employing disabled individuals
(provided that certain conditions are
met), and IT companies, among others.
Rates on
remuneration up
to the threshold
Rates on
remuneration
in excess of the
threshold
22%
10%
Pension Fund
Social Insurance
Fund
RUB796,000
RUB718,000
2.9%
Federal Mandatory
Medical Insurance
Fund
n/a
5.1%
5.1%
KPMG
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