Tax changes in Russia from 2025: new rates, deductions, and tax obligations for businesses and individuals

Starting from January 1, 2025, significant changes in tax legislation have come into effect in Russia, affecting both individuals and legal entities. A progressive personal income tax scale, an increase in corporate profit taxes, new deductions, changes in the taxation system for small and medium-sized businesses, as well as the introduction of a tourist tax—all of these factors will have a significant impact on financial planning and tax obligations. In this article, we’ll take a closer look at the key changes to the tax system that will take effect in 2025 and explain how they may impact taxpayers.

Personal income tax

Starting from 01.01.2025, the progressive personal income tax scale has been significantly expanded.

Instead of the two rates—13% and 15%—for the main types of income of Russian tax residents, five different rates are being introduced, each applied to the amount exceeding the threshold of the previous one (Article 224(1) of the Russian Tax Code):

• 13% on income up to RUB 2.4 million inclusive;
• 15% on income from RUB 2.4 million to RUB 5 million per year inclusive;
• 18% on income from RUB 5 million to RUB 20 million per year inclusive;
• 20% on income from RUB 20 million to RUB 50 million per year inclusive;
• 22% on income more than RUB 50 million per year (Article 210(2.1) of the Russian Tax Code).

For income in the form of remuneration paid to persons working in the Far North, and participants in the Special Military Operation, the current tax rates will remain: 13% on income up to RUB 5 million inclusive; 15% on income more than this amount (Articles 224(1.2), 210(6.1) and 210(6.2) of the Russian Tax Code).

Furthermore, for certain types of income of tax residents of Russia, such as income from the sale of property; insurance income; income from equity participation (dividends); income from transactions with securities, shares, and derivative financial instruments; certain types of financial benefits; income from REPO transactions and interest on deposits, the following rates have been established  (Article 210(6) of the Russian Tax Code):

• 13% on income up to RUB 2.4 million inclusive;
• 15% on income over that amount (Article 224(1.1) of the Russian Tax Code).

The tax rates on the income of certain tax non-residents of Russia have also been changed. Thus, the income of highly-qualified specialists, foreign citizens employed, ship crews, and refugees will be taxed according to the five main tax rates. These same rates will apply to the income of employees working remotely from abroad, as well as individuals providing online services from abroad using Russian domain names.

Starting from 01.01.2025, the amount of the standard tax deduction for the second and subsequent children has been increased

The tax deduction for the second child has been increased from RUB 1,400 to RUB 2,800. For the third and each subsequent child, it has been raised from 3,000 to 6,000 rubles. Additionally, the deduction for each disabled child has been increased from 6,000 to 12,000 rubles. The total income threshold at which the deduction ceases to apply has also been raised from 350,000 to 450,000 rubles. The deduction will be provided by the employer (as the tax agent) without requiring a formal request from the taxpayer-employee (Article 218(1)(4) of the Russian Tax Code).

A new standard tax deduction introduced from January 1, 2025

A tax deduction of 18,000 rubles per tax period will be granted to individuals who have passed the GTO (Ready for Labor and Defense) physical fitness standards and have confirmed their awarded distinction, provided they have also undergone a medical examination.

Changes in Personal Income Tax Calculation by Tax Agents

When calculating personal income tax, the tax agent considers the actual expenses incurred and documented by the individual taxpayer based on their application (Article 266(11) of the Russian Tax Code). The deadline for notifying the tax authorities about the inability to withhold PIT has been extended until January 31 of the year following the reporting tax period (Article 266(5) of the Russian Tax Code).

Additionally, the list of tax agents has been expanded. It now includes:

• Foreign organizations that pay income to taxpayers providing online services from abroad using Russian domain names (the requirement to tax such income also comes into effect on 01.01.2025).
• Russian organizations that provide technical capabilities for rendering such services (Article 266(1.1) of the Russian Tax Code).

Mining Income is Subject to Personal Income Tax

Income from Russian sources includes earnings in the form of digital currency obtained through cryptocurrency mining in Russia (Article 208(1)(9.3) of the Russian Tax Code).

Such income is recognized as in-kind income, and the value of the digital currency is determined based on its market quotation on the date the income is actually received (Article 211(1) of the Russian Tax Code).

At the same time, a tax deduction is provided for documented expenses related to cryptocurrency mining (Article 220(1)(5) of the Russian Tax Code).

Changes to Personal Income Tax exemptions

Starting from January 1, 2025, the exemption from personal income tax (PIT) on income from the sale of shares or stakes in the authorized capital, due to ownership for more than five years, will only apply to taxpayers who are tax residents of Russia (Article 217(17.2) of the Russian Tax Code). A limit of RUB 50 million has also been set for the amount of exemption. Furthermore, the method for calculating the tax-free severance pay (equivalent to three months’ salary) has been modified. It will now be calculated in the same manner as maternity benefits and monthly childcare allowances (Article 217(1) of the Russian Tax Code).

CFC fixed profits changed for 2025

For one CFC, fixed profits are set at RUB 27,990,000, for two CFCs, at RUB 52,718,000, for three CFCs, at RUB 75,445,300, four CFCs, at RUB 98,172,600, and five or more CFCs, at RUB 120,899,900 (Article 227.2(2) of the Russian Tax Code).

Corporate Income tax

Income tax rates will go up

Ef Starting from January 1, 2025, the general corporate income tax rate has been raised from 20% to 25% (Article 284(1) of the Russian Tax Code). The additional 5% will be allocated to the federal budget: instead of the previous 2%, 7% will now be directed to the federal budget (8% from 2025 to 2030).

The tax rate for IT companies has also increased by 5%, from 0% to 5%. The additional 5% will also be allocated to the federal budget. Furthermore, a limitation has been introduced – this rate will only apply until 2030. After 2030, IT companies will be required to apply the general rate of 25% (Article 284(1.15) of the Russian Tax Code). Additionally, a 5% increase has been introduced for Russian organizations engaged in the radio-electronics industry, raising the rate to 8%. This rate will only be applicable until 2027, and the tax will be allocated to the federal budget (Article 284(1.16) of the Russian Tax Code). Moreover, the tax rate on interest income from government and municipal securities, as well as mortgage-backed bonds, has been increased by 5% to 20% (Article 218(4)(1) of the Russian Tax Code).

Other Changes in Specific Corporate Income Tax Rates

For organizations included in the register of small technology companies, regional laws may establish a reduced corporate income tax rate for the portion allocated to regional budgets in the period from 2025 to 2030 (Articles 284(1.85) to 284(5) of the Russian Tax Code). The tax rate on income from hydrocarbon extraction at new offshore fields has been reduced from 50% to 40%. This rate applies from the 8th to the 12th tax period from the start date of extraction (Articles 284(1.4) of the Russian Tax Code Income from the development of subsurface resources, under certain conditions, is taxed at a 20% rate (Articles 284(1.17) to 284(1) of the Russian Tax Code). Income from oil transportation in the tax periods from 2025 to 2030 will be subject to a 40% tax rate (Articles 284(1.19) of the Russian Tax Code).

A federal investment deduction introduced

In addition to the existing regional investment tax deduction, a federal investment deduction has been introduced (Article 286.2 of the Russian Tax Code). Taxpayers can choose only one of these deductions.

The federal deduction allows companies to reduce their corporate income tax (or advance payments) allocated to the federal budget by covering specific expenses, including:

Acquisition, construction, manufacturing, and delivery of certain fixed assets, as well as bringing them to a usable condition.

Completion, retrofitting, reconstruction, modernization, or technical re-equipment of such fixed assets and/or intangible assets (IA).

This deduction is available to taxpayers whose primary business activity (as listed in the Unified State Register of Legal Entities, EGRUL) falls under one of the following categories:

• Mining
• Manufacturing industries
• Electricity, gas, and steam supply; air conditioning
• Hotel and food service activities
• Scientific research and development
• Telecommunications
• Information technology

A participant in the ERA Technopolis exempted from tax

An entity that has been granted the status of a participant in the ERA Technopolis is entitled to exemption from the duties of an income taxpayer for 10 years (Article 246.1-1 of the Russian Tax Code).

Increased Adjustment Coefficients

The adjustment coefficient applied to expenses related to acquiring the right to use software (SW) and databases has been increased from 1.5 to 2. Additionally, the scope of this coefficient has been expanded to include expenses for acquiring software-hardware systems, as well as for adapting and modifying software and databases (Article 264(1)(26) of the Russian Tax Code). In addition, the coefficient applied to R&D expenses has been increased from 1.5 to 2 (Article 262(1)(4) of the Russian Tax Code).

Extended Exchange Rate Difference Accounting Rules

The current rules for accounting for exchange rate differences have been extended until 2027. Under this rule, exchange rate differences arising at the end of the month are included in expenses/income only at the date of debt repayment (Article 272(7)(6.1) of the Russian Tax Code).

Expanded 0% Tax Rate for Publicly Traded Shares

Effective from January 1, 2025, the 0% rate applies to transactions in traded shares, regardless of the composition of the issuer’s assets, if the taxpayer sells no more than 1% of the total number of shares. Previously, this 0% tax rate was applied only if Russian real estate accounted for no more than 50% of the organization’s assets (Articles 284.2(2) of the Russian Tax Code).

Restrictions on Deductible Expenses for Corporate Income Tax

Expenses on online advertising can no longer be deducted if:

• The advertising information was not submitted to Roskomnadzor.
• The ad was placed on a restricted access resource.
• The ad was placed by a foreign entity that has not complied with Russian legal requirements. (Articles 270(44) of the Russian Tax Code).

Simplified tax system

• Increased Limits for Using the Simplified Tax System (STS)

 

• The income threshold for switching to the simplified tax system has been increased from RUB 12.5 million to RUB 337.5 million (Articles 364.12(2) of the Russian Tax Code). If a taxpayer lost the right to use STS in 2024 due to exceeding the income limit, they may reapply for STS from January 1, 2025, provided their total income for the first nine months of 2024 did not exceed 337.5 million RUB.
• The maximum average number of employees for STS eligibility has been increased from 100 to 130 (Article 346.12(3)(15) of the Russian Tax Code).
• The residual value of fixed assets has been raised from 150 million RUB to 200 million RUB. The value of Russian high-tech equipment is not included in this limit (Article 346.12(3)(16) of the Russian Tax Code).
• The income threshold for continuing to use STS has been increased from 200 million RUB to 450 million RUB (Articles 346.13(4) of the Russian Tax Code). If a taxpayer exceeds this threshold, the STS status will be lost at the beginning of the following month rather than at the beginning of the next quarter as was the case before January 1, 2025 (Article 346.13 of the Russian Tax Code).

Payment of VAT

Starting from January 1, 2025, Simplified Tax System (STS) taxpayers are required to pay VAT if their income exceeds 60 million RUB. Previously, STS taxpayers were exempt from VAT payments regardless of income level (Articles 145(1) of the Russian Tax Code). Now, taxpayers have the option to choose between:

• Applying standard VAT rates, which allows them to claim VAT deductions, or
• Applying reduced VAT rates (5% for income between 60 million to 250 million RUB per year, and 7% for income between 250 million to 450 million RUB per year), but losing the right to claim VAT deductions.

The previously used increased STS rates have been canceled. The standard rates are:

• 6% for the “income” tax base,
• 15% for the “income minus expenses” tax base

(Article 346.20 of the Russian Tax Code).

Other taxes and contributions

Tourist Tax Across Russia

Starting in 2025, a tourist tax will be introduced across all of Russia, replacing the previously existing resort fee, which applied only in certain resort regions. The new tax will apply to both organizations and individuals providing accommodation services to people in establishments listed in a special registry.

• Tax base: The cost of the service excluding VAT.
• The tax rates will be set by municipalities and may vary depending on seasonality and/or the category of accommodation.
• Certain exemptions are provided in the Tax Code for disabled individuals and veterans, and additional exemptions may be determined by municipalities.
• In 2025, the rate cannot exceed 1%. Gradual increases are planned as follows:
  • 2026 – 2%
  • 2027 – 3%
  • 2028 – 4%
  • 2029 and beyond – 5%
• A minimum tax of 100 RUB per day will apply.
• The tax will be paid quarterly, not based on the taxpayer’s registration location, but at the location of the accommodation (property).

Automated STS

The possibility of using the automated simplified tax system has been extended to all regions and will remain in effect until 2027 (Article 6 of Federal Law No. 362-FZ dated October 29, 2024).

Property tax and land tax on high-value properties

For properties taxed based on cadastre value that exceed 300 million RUB, a higher tax rate of 2.5% is introduced (Article 380(1.3) of the Russian Tax Code). Similarly, for land plots with a cadastre value exceeding 300 million RUB, the tax rate has been increased to 1.5% (Article 394(1)(1) of the Russian Tax Code).

Insurance contributions

The limit for applying reduced insurance contribution rates for small and medium-sized enterprises (SMEs) has been raised. The new limit will be 1.5 times the minimum wage (MW), instead of just the single MW (Article 427(1)(17) of the Russian Tax Code).

For SMEs in the manufacturing sector, a unified reduced insurance contribution rate of 7.6% will apply to the portion of salaries exceeding 1.5 times the MW. Centralized religious organizations will be exempt from insurance contributions (Articles 427(1)(23) and 427(2.6) of the Russian Tax Code).

Various types of state fees significantly increased

For transactions involving expensive real estate, the duty will depend on the cadaster value of the property. For legal entities, the fee may be up to 1 million RUB, and for individuals, it may be up to 500,000 RUB.