Accounting and Taxes in Russia

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Accounting, bookkeeping and taxes in Russia - As a fundamental part of the external accounting system, Russian accounting is an elementary component when it comes to mapping the financial situation of a company operating in Russia. Numerous special features and the direct effect of tax regulations mean that the administration of the commercial books in Russia, especially for foreign investors, appears much more complicated and costly than they are used to from Western accounting.

 

Special characteristics of Russian accounting

All companies operating in the Russian Federation are required by law to keep proper accounting records. This means that all business transactions must be recorded in numerical values and in chronologically ordered, complete form and verifiable by corresponding documents. Thus, it is not so much the underlying idea as the implementation of local accounting in Russia that differs from that of many Western countries. The numerous differences start with the chart of accounts, which serves as a framework for entering business transactions. In Russia, this can not be freely chosen by the company and adapted to the economic area of activity or individual requirements. It is specified by the state as binding. Finally, Russian accounting rules are used primarily to calculate the tax to be paid and not so much to transparently present the financial situation of a company.

Companies in Russia are required by law to prepare their balance sheets, income statements and tax returns on a quarterly basis and submit them to the local authorities. In addition, reports must be submitted regularly to pension, social security and statistical authorities as well as to other governmental authorities. The number of quarterly reports can vary from one quarter to another depending on the business activity and industry sector of a company, with different due dates.

Important accounting documents in Russia

Russian accounting is very bureaucratic and formalistic. This is reflected, in particular, in the number and form of the documents associated therewith. For example, a simple calculation is not sufficient to recognize revenue as income and expenses as an expense, and subsequently post it as such, as well as to make the VAT-related tax. For this, three different documents must be present in correct and consistent form in Russia. These documents are called the invoice, the invoice billing document and the surrender protocol and fulfill their own purpose.

The invoice (Shjot) serves merely as an invitation to payment, which is sent to the business partner.

The Invoice Billing Document (Shjot Billing Document) is particularly relevant in connection with the presentation of the value-added tax. Without this, the input tax paid can not be claimed.

The transfer protocol, in the case of services performed (Akt) and in the case of goods deliveries (Nakladnaja), confirms the proper provision of a service or the receipt of goods.

This means not only a considerable amount of time, which must be calculated and applied for the preparation, processing and answering of the documents, but also an increased administrative burden compared to the West.

Up to a few years ago, the legality or legality of these three accounting documents was limited to the original, which had to be in paper form. An electronic document exchange (EDE) is now possible through a specialized provider. However, the prerequisite for this is that the business partner also fulfills all the necessary prerequisites for such an electronic document exchange.

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Exchange of foreign currency in Russia

Regardless of the above-mentioned documents, foreign investors should note that in Russia every cross-border payment is subject to foreign exchange control. Accordingly, companies in Russia are obliged to inform the bank of all transactions concluded in foreign currency and to submit all related documents such as contract, invoice and act or delivery note in due time.

Taxes in Russia

Taxes are not always charged uniformly in Russia. Russian tax law, which covers both the type of tax and the tax rate, distinguishes between federal, regional and local taxes. The amount and due date have a significant impact on both the business activities of an enterprise within its national borders as well as on the return of funds to its parent company abroad.

The table below provides an overview of the main Russian tax types and their respective rates:

Tax type

Tax rate

VAT (Value-Added Tax)

0%

10%

20%

Profit Tax

(Corporate Income Tax)

20%

15,5% Special economic zones

0% Special investment agreements

Personal Income Tax

13% Residents 

30% Non-Residents

Wealth tax

Max. 2,2%

Dividend Tax

(withholding tax)

15% - with double taxtation treaty reduction to 5%

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Business Set-Up, accounting and reporting in Russia

Ausserer & Consultants is an international tax and accounting company based in Moscow, St. Petersburg and Vienna. Since our foundation in 2012, we have made it our mission to support small and medium-sized companies in local accounting including tax returns, reporting, business Set-Up and expansion in Russia. We also advise on individual questions regarding the Russian market and support our clients at all times.