Excess profits tax

Excess profits tax

The draft Laws No. 379248-8 and No. 379177-8 have been submitted to the State Duma of the Russian Federation, which establish an excess profits tax (hereinafter – tax), which is a one–off tax, as well as appropriate legal tools for integrating the new tax into the current system of the Russian tax law.

The tax applies to:

  • Russian organisations,
  • foreign organisations operating in Russia through a permanent establishment,
  • foreign organisations recognised as Russian residents in accordance with Article 262.2 of the Russian Tax Code.

The tax will not apply to:

  • small and medium-sized businesses,
  • organisations established after 1 January 2021 (except for those created in course of reorganisations),
  • foreign organisations that started operating through a permanent establishment after 1 January 2021,
  • organisations of extractive industries and oil and liquefied natural gas processors,
  • the payers of the Unified Agricultural Tax.
The object of taxation is excess profit, defined as the excess of the arithmetic mean of profits for 2021 and for 2022 over the arithmetic mean of profits for 2018 and 2019.  Profit is defined as a sum of tax bases formed in accordance with the requirements of the Russian Tax Code and is subject to some exceptions.

Generally, the tax base is the monetary value of excess profits. The tax base is equal to zero in the following cases:

  • if the arithmetic mean of profits for 2021 and 2022 is not more than the arithmetic mean of profits for 2018 and 2019;
  • if the arithmetic mean of 2021 and 2022 profits was not more than 1 billion rubles.

The tax rate equals to 10%

It is proposed to establish a tax deduction for organisations that would make a pre-payment of the tax within the period from 1 October 2023 to 30 November 2023, at the same time the amount of such a deduction would not exceed 50% of the amount of tax calculated.

The tax return is due until 25 January 2024, the tax is paid until 28 January 2024.

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