Russian personal tax rates

The Code was created, adopted and implemented in three stages. The first part, enacted July 31, 1998, also referred to as the General Part, regulates relationships among taxpayers, tax agents, tax-collecting authorities and legislators, tax audit procedures, resolution of disputes, and enforcement of law. The second part, enacted on August 5, 2001, defines specific taxes, rates, payment schedules, and detailed procedures for russian personal tax rates calculations.

2003 with additions like the new corporate profits tax section and the new simplified tax system for small business. The Code is subject to regular changes which are effected through federal laws. The Code is designed as a complete national system for federal, regional and local taxes but excludes customs tariffs. Rules and rates of regional and local taxation must conform to the framework established by the Code. Taxes or levies not listed explicitly by the Code or enacted in violation of its specific provisions are deemed illegal and void. The Russian tax system tends to use moderate flat or regressive tax rates. It is highly centralized for a federal state and relies heavily on proceeds from oil and natural gas corporations, who themselves are mostly state owned.

In his February, 1995 presidential address Boris Yeltsin proposed to re-centralize and streamline the tax system through a unified Tax Code. Individual property tax is explicitly authorized by the Code but exists as a standalone law. The Duma restarted the process, inviting competing drafts to be filed by January 31, 1998. Enactment of the Code was hastened by the imminent 1998 Russian financial crisis.

Sergei Kiriyenko, appointed Prime Minister in April 1998, included the Code in the government’s anti-crisis package. 2000 taxpayers still paid multiple taxes with the old rates. The tax rate was decreased to 24 percent for all taxpayers. At the same time, the Code abolished tax breaks, broadening the tax base. In December 2001 legislators created a simplified tax system for agriculture. On January 1, 2004 the VAT rate decreased from 20 percent to 18 percent.

On January 1, 2005 Russia abolished the tax on advertising—the last remaining provision from the early 1990s. Code provides a detailed plan for raising the rates until 2010 fiscal year. By the end of 2008, the unified social tax should be either raised or totally redesigned to help balance social expenditures. In October 2008 the government agreed on changes to the UST mechanism and rate curve, effectively splitting the unified tax into separate payments. Distinction between federal, regional and local taxes depends on the level of legislature that is entitled to establish rates for that kind of tax.

Code but set by regional laws. VAT paid to suppliers that has not yet materialized into services or goods cannot be credited against current tax liability. VAT paid to suppliers on export sales is refunded in full if the seller receives payment for exports within 6 months of shipment. Refund of export VAT has become a major source of fraud, while law-abiding exporters have to resort to court action to get the refund. VAT ineligibility is a very common charge by tax authorities. An April 2004 ruling by the Constitutional Court of Russia that increased corporate tax liabilities was revoked by Supreme Arbitrage Court in December 2004. The Federal Tax Service resolved the same case one year later.