1. Authors: Jon Hellevig, Anton Kabakov, and Artem Usov.
Jon Hellevig, Managing partner of Awara Group Anton Kabakov, Partner of Awara Group Artem Usov, Partner of Awara Group
LinkedIn: http://www.linkedin.com/in/jonhellevig LinkedIn: http://ru.linkedin.com/pub/anton- LinkedIn: : http://www.linkedin.com/in/artem-
Facebook: http://www.facebook.com/jonhellevig kabakov/31/b21/200 usov
E-mail: jon.hellevig@awaragroup.com E-mail: anton.kabakov@awaragroup.com E-mail: artem.usov@awaragroup.com
Website: www.awaragroup.com Website: www.awaragroup.com Website: www.awaragroup.com
This blog post represents an updated excerpt from the soon to be published Awara Russian Tax Guide.
Authors: Jon Hellevig, Anton Kabakov, and Artem Usov.
Publishing date: 06.02.2013, considering the Russian tax laws in force at the date and case law up to date.
CORPORATE PROPERTY TAX
The Provisions on corporate property tax are in chapter 30 of the Tax Code. To note that the rules
concerning taxation of property of individuals are in another law, namely the Law ‘On taxation of
property of individuals’ (Law N 2003-1 of 09.12.1991; see next chapter).
Corporate Property Tax is a regional tax. The regions of the Russian Federation are allowed to regulate
some provisions of the tax, among them the tax rate, but within the general framework provided by the
Tax Code.
Effective of January 1, 2013 there is a major change in the corporate property tax. Movable assets which
have been recorded as fixed assets (in company’s accounting balance) are now excluded from the tax
base. This means that the movable fixed assets which have been acquired earlier (before January 1, 2013)
still remain taxable.
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2. Exempt assets and taxpayers
Taxpayers of corporate property tax are Russian and foreign legal entities for the assets which fall within
the scope of the law.
Certain categories of assets are exempt from corporate property tax (374.4), and certain types of assets
held by certain categories of taxpayers are excluded from the scope of the tax (art. 381) such are, for
example:
Movable assets recorded as fixed assets (in company’s accounting balance) not earlier than 1 January
2013
- Land and water resources
- Vessels registered into the Russian international ship register
- Spacecraft (space objects)
- Assets which have by virtue of law been recognized as historical or cultural assets
- Assets of residents of special economic zones (for a limited period of time)
- Assets of religious organizations, which are used in their statutory activities.
- Assets of Russian nationwide organization of disabled persons (when the membership consists of
no less than 80 percent of disabled people).
- Production assets of pharmaceutical companies
- Certain new investments in high-energy efficiency facilities according to a list established by the
Russian Government (Decree of the Russian Government N 562 of 12.07.2011; benefit available
3 years from the registration date of the property).
Russian regions are granted some levy in granting concessions on the corporate property tax (article 372).
Objects of taxation
According to the law the objects of taxation are different for Russian legal entities and for foreign legal
entities. There is a further difference between taxation of assets of foreign firms acting through a
permanent establishment and those that do not constitute a PE.
For Russian legal entities taxable assets are defined as (art. 374) movable or immovable assets that are
recorded in statutory financial accounting books as fixed assets (including such fixed assets that have
been transferred for temporary possession or use, joint activity etc.). But note that following the change
in law reported above movable fixed assets recorded in company balance from new year 2013 are not
included in the tax base.
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3. For foreign legal entities that conduct business in Russia through a permanent establishment the taxable
assets are defined as movable or immovable assets considered as fixed assets and assets received by way
of concession agreements.
Those foreign legal entities that do not form permanent establishments in Russia are taxed only for
immovable assets (including those received on concession agreements).
It should be noted that immovable assets include ships and aircraft in addition to real estate (whereas land
is excluded from the tax base). Also to note that by law immovable assets have to be registered in state
registers as detailed in relevant laws. The registration requirement should remove any doubt as to which
assets are actually to be considered as immovable assets in case of a dispute with tax authorities.
According to the law land and other natural objects (such as water resources) are not the object of
corporate property tax. However, there is a separate land tax and a tax on water resources.
Tax Rate, Periods and Tax Base
As the corporate property tax is a regional tax, the regions are authorized to set the tax rate within the
maximum rate provided by the Tax Code, which is 2.2%. Hereby most of the regions have chosen to set
the rate at the highest permissible.
The tax period is a calendar year, but taxpayers are required to make advance payments as set out in the
relevant regional law.
The tax base is calculated as the asset’s average annual accounting value. In respect of foreign companies
that perform business activity without forming a permanent establishment the tax base will be determined
as the inventory value of their immovable assets as assessed by the agency charged to perform technical
inventory.
If you want to discuss this article, please contact the authors:
Jon Hellevig, Managing partner of Awara Group
Facebook: http://www.facebook.com/jonhellevig
LinkedIn: http://www.linkedin.com/in/jonhellevig
E-mail: jon.hellevig@awaragroup.com
Anton Kabakov, Partner of Awara Group
LinkedIn: http://ru.linkedin.com/pub/anton-kabakov/31/b21/200
E-mail: anton.kabakov@awaragroup.com
Artem Usov, Partner of Awara Group
LinkedIn: http://www.linkedin.com/in/artem-usov
E-mail: artem.usov@awaragroup.com
MOSCOW, ST.PETERSBURG, TVER, YEKATERINBURG, KYIV, HELSINKI
WWW.AWARAGROUP.COM
WWW.HKUPARTNERS.COM