A report on the estimated profit for a company each quarter must be filed before the beginning of the quarter, with a quarterly return of actual results filed by the end of the month following the quarter. Monthly tax payments are made based on the estimate, with a balancing payment at the end of the quarter, on the basis of cumulative year to date results. A final annual return, and balancing payment, is made by 1 April following the accounting year. A company with foreign shareholders must have the return audited.
Small businesses, as defined, do not need to make advance tax payments.
A representative office or branch of a foreign legal entity is only required to file one return (which it must file even if not liable to profits tax) by 15 April following the accounting year. Tax is payable following the issue of an assessment.
A foreign legal entity which has no presence in Russia but has a source of income in Russia, must file a notification with the tax authorities, irrespective of whether a claim is to be made under a double tax treaty for exemption or reduction.
VALUE ADDED TAX
Most businesses are required to file a return by the 20th of the month following the reported month. Payments must be made by the 15th and 25th of the current month and 5th of the following month in instalments equal to one third of the previous month's liability.
PERSONAL INCOME TAX AND SOCIAL SECURITY
The employer must generally file a return with the tax authorities and each of the social funds, by the end of the month following the month of payment. Payments should be made on the same date as the cash for the salaries is withdrawn from the bank.
Where withholding is not required, for example where expatriate salaries are paid from a overseas company, the individual must file an estimated return within 30 days of knowing that he will be tax resident in Russia, and an annual return by 31 March following the calendar year. This return also provides for the disclosure of estimated earnings for the current year. Tax is assessed and payable on these estimated earnings in three instalments on 15 May, 15 August and 15 November during the calendar year, with a balancing amount payable following submission of the annual return of actual earnings.
PENALTIES AND INTEREST
The penalty and interest regime can be severe, with a typical penalty of 100% of the amount under-declared or the amount of unpaid tax, and an interest rate of 0.3% per day in most cases. However, errors which are voluntarily declared will incur neither interest or penalties, provided the tax is paid over.
For further information contact Bauke van der Meer on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly: Click Contact Link or enter a text search 'Coopers & Lybrand' and 'Business Monitor'
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