Doing Business in Russia

32 Doing Business in Russia Property tax Property tax is levied on those properties listed on a taxpayer's balance sheet as fixed assets (except for land plots). Tax base Generally the tax base is the net book value of the average annual fixed assets according to Russian statutory accounting. For a number of property types (administrative and business centres; nonresidential premises aimed to be used/ actually used as offices or for trading and catering; a FLE'S immovable property that does not have PE status in Russia, or is not being used in the PE's operations in Russia; residential premises not accounted for as a fixed asset on the balance sheet), the tax base is the cadastral value of the specific facility. Movable property that has been booked as a fixed asset since 1 January 2013 is exempt from tax, except for facilities booked as a result of reorganisation or the liquidation of a legal entity, or as a result of a transfer between related parties. FLES having no PE in Russia are subject to property tax only on immovable property located in Russia. Tax rate The maximum tax rate is 2.2%. Lower tax rates are established for assets classified as public railways, pipelines and power lines, and on assets constituting an integral, technical component of the above. A list of these types of assets has been compiled by the Government of the Russian Federation. The rates for these assets are 1.3% in 2016, 1.6% in 2017, and 1.9% in 2018. The regional authorities can reduce the property tax rate to zero percent. With respect to immovable property (for which the tax base is the cadastral value), the tax rate cannot exceed 2%. Tax concessions The Tax Code provides a number of property tax concessions. In particular, companies are exempt from property tax on assets classified as federal highways intended for public use and on assets constituting an integral, technical component of these highways. A list of these assets has been compiled by the Government of the Russian Federation. Property tax paid by a Russian legal entity on property located outside of Russia can be offset when paying property tax in Russia. To carry out this offsetting, the taxpayer should submit a document confirming the payment of property tax abroad. Filing and payment The regional authorities set the terms for advance and final property tax payments. Property tax calculations are filed quarterly. The annual property tax return should be filed by 30 March of the year following the reporting year. Other taxes Transport tax Foreign legal entities and Russian legal entities should both pay transport tax if they own registered transport vehicles. Taxable vehicles include automobiles, motorcycles, scooters, buses, airplanes, helicopters, merchant vessels, yachts, sailing boats, boats, snowmobiles, etc. The tax base is calculated based on the engine volume, gross tonnage or type of vehicle. The tax rates are established by the Tax Code and range from RUB 1 to RUB 200 (USD 0.02-3) per unit of horsepower and can increase or decrease by up to ten times, depending on the region. The regional authorities are allowed to offer tax incentives and allowances for certain categories of taxpayer. The terms for the submission of transport tax payments and the filing of advance calculations are established by the authorities of the region where the vehicle is registered. However, the final annual payment and annual tax return is due no earlier than 1 February of the following year. Land tax Land tax is calculated based on the cadastral value of land plots according to the Russian Federation legislation applicable to the region where the land plot is located. The Tax Code provides that land tax rates for land designated for agricultural purposes and housing must not be higher than 0.3%, and no higher than 1.5% of the cadastral value of the land plot for land used for any other purposes. The regional authorities can decrease this rate and also offer tax incentives or allowances to certain taxpayer categories. Advance payments are due quarterly, with the final tax payment due no earlier than 1 February of the following year. Water tax Water tax is payable by companies that consume water for special and clearly- indicated business purposes. Tax rates differ for various types of water consumption and are set in RUB per 1000 cubic metres of water consumed. Water tax returns are filed quarterly, with payments also being made quarterly. 4 Actual exchange rate of the Central Bank of the Russian Federation as of 2 June 2016 (RUB 66.6156: USD1) KPMG © 2016 KPMG. All rights reserved.

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