On July 12, the Russian President signed Federal Law No. 176-FZ from 12.07.2024, which provides for large-scale changes in taxation from 2025 for all categories of taxpayers. Significant changes for Russian legal entities are discussed below.
Personal income tax
The most important innovation is the new procedure for taxation of personal income. Starting from 2025, a five-stage taxation scale will be introduced for the majority of individuals' incomes instead of the two-stage scale currently in force. The progressive personal income tax scale will be applied to the aggregate of all income of individuals - tax residents of the Russian Federation, subject to taxation. Personal income tax rates from 2025 will depend on the type of income and will be as follows:
The increased rates will not apply to the entire amount of income, but only to the amount exceeding the threshold provided for a particular rate.
VAT for the simplified taxation system
Currently, organizations and individual entrepreneurs applying the simplified taxation system are not VAT payers as a general rule. From 2025, only those companies and sole proprietors under the simplified taxation system whose revenues of the previous or current year do not exceed RUB 60 million in the aggregate will not be able to pay VAT.
From 2025, organizations and sole proprietorships on the simplified taxation system have the right to make taxation as follows:
Corporate income tax
Starting from 2025, the corporate profit tax rate will also increase from 20 to 25%. At the same time, the amount of tax calculated at the tax rate of 7% (8% in 2025-2030) will be credited to the federal budget.
For Russian organizations included in the register of small technology companies, a reduced tax rate may be established for the tax to be credited to the budgets of constituent entities of the Russian Federation. At the same time, regions will be able to establish additional conditions for the application of reduced tax rates and additional requirements for such taxpayers.
For Russian organizations operating in the field of information technologies the rate of 5% is set until 2030.
For certain categories of profit tax payers, the law introduces a new type of deduction, the federal investment tax deduction, which will allow the amount of tax to be credited to the federal budget to be reduced by the amount of capital expenditures within the framework of the realization of investment projects.
Personal income tax
The most important innovation is the new procedure for taxation of personal income. Starting from 2025, a five-stage taxation scale will be introduced for the majority of individuals' incomes instead of the two-stage scale currently in force. The progressive personal income tax scale will be applied to the aggregate of all income of individuals - tax residents of the Russian Federation, subject to taxation. Personal income tax rates from 2025 will depend on the type of income and will be as follows:
- 13 % - if the annual income leaves up to RUB 2.4 million.
- 15% (from the amount exceeding RUB 2.4 million) – if the annual income exceeds RUB 2.4 million and up to RUB 5 million.
- 18 % (from the amount exceeding RUB 5 million) – if the annual income exceeds RUB 5 million and up to RUB 20 million.
- 20 % (from the amount exceeding RUB 18 million) – if annual income exceeds RUB 20 million and up to RUB 50 million.
- 22 % (from the amount exceeding RUB 20 million) – if annual income exceeds RUB 50 million.
The increased rates will not apply to the entire amount of income, but only to the amount exceeding the threshold provided for a particular rate.
VAT for the simplified taxation system
Currently, organizations and individual entrepreneurs applying the simplified taxation system are not VAT payers as a general rule. From 2025, only those companies and sole proprietors under the simplified taxation system whose revenues of the previous or current year do not exceed RUB 60 million in the aggregate will not be able to pay VAT.
From 2025, organizations and sole proprietorships on the simplified taxation system have the right to make taxation as follows:
- to tax at regular VAT rates – 20%, 10% with the right to apply VAT deductions;
- to apply reduced VAT rates of 5% (if income has not exceeded RUB 250 million) or 7% (if income has not exceeded up to RUB 450 million) without the right to VAT deductions.
Corporate income tax
Starting from 2025, the corporate profit tax rate will also increase from 20 to 25%. At the same time, the amount of tax calculated at the tax rate of 7% (8% in 2025-2030) will be credited to the federal budget.
For Russian organizations included in the register of small technology companies, a reduced tax rate may be established for the tax to be credited to the budgets of constituent entities of the Russian Federation. At the same time, regions will be able to establish additional conditions for the application of reduced tax rates and additional requirements for such taxpayers.
For Russian organizations operating in the field of information technologies the rate of 5% is set until 2030.
For certain categories of profit tax payers, the law introduces a new type of deduction, the federal investment tax deduction, which will allow the amount of tax to be credited to the federal budget to be reduced by the amount of capital expenditures within the framework of the realization of investment projects.