Important: to conduct business in Russia as an individual entrepreneur, a foreign person must have a temporary residence permit or a residence permit. You can read more about choosing and registering a legal entity in Russia here.
In total, there are five tax regimes for individual entrepreneurs (one general and four special):
- General tax system
- Simplified tax system
- Patent tax system
- Unified agricultural tax
- Tax on professional income
Next, we will consider each of the tax systems in more detail:
General tax systemThe general tax system is a tax regime that is automatically assigned to all individual entrepreneurs and organizations after their creation. As a rule, the general regime is used by those entrepreneurs and organizations that, for whatever reason, cannot be in other taxation systems.
Under this tax system, an individual entrepreneur will pay tax on personal income, VAT and property tax of an individual.
The profit of the organization is usually taxed at a rate of 20%, and the VAT rate can be 0, 10 or 20% - depending on the type of activity. For property, the rate does not exceed 2.2% of its value.
Personal income tax in the case of individual entrepreneurs is calculated in the same way as corporate income tax, but at a rate of 13%. For VAT, the rate is also 0, 10 or 20%, and for property tax - 2% of the cadastral value.
The general tax system is the most complex, but it can also be the most profitable. When choosing this regime, it is extremely important to find a highly qualified accountant who can competently keep your tax records (since this system entails particularly close control by the tax authorities). Members and partners of the RASPP are large accounting, legal and consulting firms with an impeccable reputation in Russia and abroad. If you have any difficulties in finding a qualified accountant, the RAUIE specialists will always be glad to help you with this.
Simplified tax system
It is a special tax regime that is most popular for paying taxes and keeping records. Compared to other special regimes, the STS covers a much larger number of entrepreneurial activity types.The entrepreneur has the right to switch to the simplified tax system if certain conditions are met. In 2021, these are:
- Limit of income based on the reporting results or tax period - no more than 200,000,000 rubles.
- Number of employees - less than 130 people.
- The cost of fixed assets is less than 150 million rubles.
- Share of other organizations participation is no more than 25%.
- "Income" - the organization pays income tax, while expenses are not important. The tax rate is 6%.
- “Income minus expenses” - the organization pays tax on income, reduced by the amount of expenses. The tax rate is 15%.
It is a special tax regime that can only be applied by individual entrepreneurs, while the average number of employees should not exceed 15 people. By applying the PTS, an individual entrepreneur gets the right to buy patents for certain types of activities. When calculating the value of a patent, the amount of real income received does not matter. The tax on PTS is calculated on the basis of the potential to receive income, which is established by the laws of the constituent entities of Russia.
You can buy a patent for any period from 1 to 12 months and in any locality where it is valid. In addition, the patent can be combined with the simplified tax system.
Unified agricultural tax
It is a special tax regime for agricultural producers. Only those individual entrepreneurs have the right to apply the Unified Agricultural Tax, whose income from agricultural activities is more than 70%.
Agricultural products include products of plant growing, agriculture and forestry, animal husbandry, including those obtained as a result of growing and rearing fish and other aquatic biological resources.
The tax rate for the unified agricultural tax is 6%. However, constituent entities of the Russian Federation have the right to reduce the rate down to 0%.
Tax on professional income
It is a tax regime for the self-employed. At present, the authorities of all regions of Russia have the right to introduce it. A citizen who receives income from his professional activity pays tax at a rate of 4% (if he works with individuals) or 6% (if he works with legal entities).
There are a number of limitations in this regime. First, it can be applied as long as the income for the calendar year does not exceed 2.4 million rubles. Secondly, this regime cannot be applied if the entrepreneur:
- sells excisable goods and goods subject to mandatory labeling with identification means;
- resells goods or property rights, with the exception of property used for personal or household needs;
- is engaged in the extraction or sale of minerals;
- are intermediaries with the exception of those who deliver goods or accept payments in the interests of others;
- applies other special regimes.
The main task of an entrepreneur before registering an individual entrepreneur is to choose a tax system. The amount of your tax liabilities depends on what you choose at the initial stage.
For 10 years of work in Russia and Asian countries, the RAUIE has accumulated experience, business connections and contact base, and has also earned a high reputation and trust among the business community. Today the RAUIE offers a wide range of solutions for entrepreneurs seeking to enter the Russian market.If you still have questions or need advice on tax systems in the Russian Federation, you can leave a request in the feedback form or contact our specialists:
Maxim Kuznetsov - vice-president of the RAUIE
investment@raspp.ru
WeChat: maximkuznetsov