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Advice on taxes for IT companies

Accreditation by Ministry of Digital Development

Accreditation procedure

The following documents must be submitted to the Ministry of Digital Development either in person, by registered mail, or by emailing scanned signed copies:

  1. Application (form available from the Ministry of Digital Development website);
  2. Statement from the company signed by the company head (from available from the Ministry of Digital Development website).

Timeline – up to 30 days

Our support

  1. We verify whether the company meets the eligibility criteria for accreditation;
  2. We prepare the required documents;
  3. We send the documents to the Ministry of Digital Development;
  4. We prepare explanations and additional documents (if necessary);
  5. We obtain extracts from the register of accredited organizations;
  6. We monitor compliance with legal requirements for maintenance of accreditation.

Register of Russian software

About register

The register of Russian software was set up to:

  • Expand the use of Russian software programs and databases;
  • Confirm they originate from the Russian Federation; 
  • Provide state support to right holders of software programs and databases.

(Article 12.1 Federal Law 149-FZ dated July 27, 2006)

Timeline – up to 70 days

Our support

  1. We verify whether software programs and companies meet the requirements for inclusion in the register;
  2. We handle the formalities to include software programs in the register of Russian software programs.

VAT

For Russian IT companies

  • The sale of Russian software programs and databases has been exempted from VAT since 2021; 
  • Software programs and databases must be included in the register of Russian software programs and databases to be exempted from VAT;
  • VAT exemption applies to the entire supply chain (vendor – distributor – integrator) 

(Federal Tax Service Letter N СД-4-3/20902@ dated December 18, 2020)

Exceptions: Software programs and databases for searching sellers and buyers, advertising goods, and concluding deals are not exempted from VAT even if they are included in the Register of Russian software programs and databases.

 

For foreign IT companies

When software programs are not included in the register of Russian software programs, companies must pay VAT. 

  • If a foreign company delivers services for a Russian buyer through a Russian or foreign intermediary, then the intermediary will report and pay VAT;
  • If a foreign company sells software programs to buyers in Russia on its own, then the foreign company will be recognized as a provider of e-services and will be required to register with the Federal Tax Service, submit VAT returns and pay VAT.

Russian buyers of foreign software programs will be entitled to deduct VAT if the foreign seller meets the requirements of the Russian Tax Code.

Our support

Profit tax

For Russian IT companies

Russian IT companies pay 20% profit tax and may apply a reduced rate (3%) if the following conditions are met:

  • Successful accreditation;

If accreditation is revoked, profit tax will be recalculated from the beginning of the current tax period.

  • At least 90% of revenues generated in the reporting period are derived from IT activities;
  • Average headcount of at least 7 people.

Our support

Our lawyers and tax specialists can advise on:

  • The criteria and procedures for calculating indicators;
  • The requirements and procedures for accreditation;
  • The procedure for application of benefits: period, calculation of taxable base;
  • Whether several special tax regimes (simplified taxation system, special economic zone, Skolkovo, etc.) may be combined.

 

For foreign IT companies

Foreign companies may be taxed under the Russian Tax Code or in compliance with double taxation treaties. Any foreign organizations operating in the Russian Federation need to consider the risks of formation of permanent establishment.

Our support

Our tax consultants can help selecting the optimal taxation regime for foreign IT companies in the Russian Federation.

Social insurance contributions

For Russian IT companies

The conditions for applying reduced social insurance contribution rates are the same as those for profit tax. The following reduced rates are provided:

  • Compulsory pension insurance 6% (instead of 22%)
  • Social insurance 1.5% (instead of 1.8% - 2.9%)
  • Compulsory medical insurance 0.1% (instead of 5.1%)

The total payroll burden when apply benefits is 7.6% (instead of 29.8% - 30%)

 

For foreign IT companies

No reduced social insurance contribution rates are provided for foreign IT companies.

Russian companies with a foreign founder may be included in the SME register and apply reduced social insurance contribution rates on this basis. To be included in the SME register, companies must meet SME criteria and engage an auditor that will confirm eligibility for inclusion in the SME register. Our auditors are duly accredited and may submit information to the Federal Tax Service for inclusion of companies with foreign participation in the SME register.

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