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EVER SINCE 2001, the tax system has become comprehensible and clear, which is a step forward, says Ekaterina Komarova, Managing Director and Partner at Ekaterina Law Consulting AB.
Ekaterina Law Consulting AB is an international company assisting Swedish companies in Russian legal matters. At the same time as the Swedish interest increases in the Russian market, the need for legal consulting has increased.
- When setting up business in Russia, you need to be familiar with rules and regulations, tax legislation as well as book-keeping and accounting rules, says Ekaterina Komarova.
A SWEDISH CITIZEN employed in Russia, is only tax liable for Russian
income. Personal income tax today is 40 percent. However, if you are hired, the income tax is only 13 percent. As hired personnel, you are not entitled to vacation or pension. This type of employment has become popular in Russia, especially for young people.
AS SELF-EMPLOYED you need to pay income tax in advance at least three times a year. The tax needs to be calculated and accounted for when filing the annual report. Advance payments for new companies are made in accordance with the owner’s estimation.
THE RUSSIAN CORPORATE tax consists of two parts; a 6.5 percent state tax and a 17.5 percent regional tax. Companies may apply for an “incentive reduction” of the regional tax to 4 percent. Small and medium sized companies may choose a different tax system called “the simple tax system”. The criteria for this system is a maximum of 100 employees and a maximum total turnover of 11 million rouble, app. EUR 310 000. This tax rate is only 6 percent of total returns or 15 percent of the difference between return and expense.
- The simple tax system is very favourable for small and medium sized companies and benefits growth, explains Ekaterina Komarova.
IF YOU SPEND more than 183 days in a calendar year in Russia, you count as a Russian citizen. Foreign companies with no permanent residence or representative office in Russia, have a 20 percent tax rate. However, if there is a double taxation agreement, the company only pays income tax in the country of origin.
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Resurrection of Christ Church, St Petersburg. Source:rucksack.se AS OPPOSED TO many other taxes in Russia, VAT is relatively simple and easy to understand. Just like in Europe, sales and import of goods are liable to VAT. In addition, you need to pay VAT on import to the Russian Federation customs area. The VAT is app. 18 percent, except for certain goods and services like medicine, with a 10 percent tax rate. In most cases, export is at zero rating.
BEFORE JOINING the WTO, Russian customs authorities are implementing a number of changes to adapt to the European norm.
- There is still a lot of bureaucracy and papers to fill in for approval, but the customs are really getting better, says Ekaterina Komarova. Earlier, it could take up to four months to import a couple of articles.
EKATERINA KOMAROVA’S advice to Swedish companies planning to set up business in Russia is to be prepared and willing to hire professional and skilled consultants.
- Despite everything that is happening in Russia right now, there is still a tricky bureaucracy to get through. If you are not an expert yourself, you need to hire a consultant to take care of all paperwork.
Emelie Ring