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Choice of Tax Regime

VALEN Group

Мы в VALEN Group объясняем сложные вопросы налогового, корпоративного и трудового права простым языком. Пишем о КИК, ВНЖ за инвестиции, НДС и проверках, аккредитации иностранных компаний и банкротстве — с цифрами, сроками и понятными алгоритмами действий. Следим за изменениями законодательства и помогаем бизнесу и инвесторам принимать верные решения на практике. Публикуем материалы на русском и английском.

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tax regimeosnousn

The choice of tax regime is the key decision that determines a company's overall tax burden.

There are two main tax regimes:

I. General Taxation System (OSNO)

If the share of a foreign shareholder – legal entity exceeds 25%, the company must apply the General Taxation System (OSNO) and pay the following taxes:

  1. 1. Corporate Income Tax
    Standard rate: 25%.
    When dividends are paid to a foreign shareholder, the company acts as a withholding tax agent and withholds tax at source at a rate of 15%.

  2. 2. Value Added Tax (VAT):
    Companies operating under OSNO are required to pay VAT at a rate of 22% and submit the relevant tax reports.
    The following VAT rates may apply:

    • 22% — standard rate: services, works, and most goods.
    • 10% — socially significant goods: food products, children's goods, medical devices, books, and periodicals.
    • 7% (or 5%) — reduced rates (available for companies under the Simplified Tax System).
    • 0% — export of goods outside the Eurasian Economic Union (EAEU), international transportation, and equivalent transactions.

II. Simplified Tax System (USN)

Under the Simplified Tax System (USN), the following revenue thresholds and VAT rules apply:

  1. Up to RUB 20 million — only USN tax at 6% is payable.
  2. From RUB 20 million to RUB 272.5 million — USN at 6% plus either VAT at 5% (without input VAT deduction rights), or VAT at 22% (with input VAT deduction rights).
  3. From RUB 272.5 million to RUB 490.5 million — USN at 6% plus either VAT at 7% (without input VAT deduction rights), or VAT at 22% (with input VAT deduction rights).
  4. More than RUB 490.5 million — USN is no longer available; the company must apply OSNO: corporate income tax 25% and VAT: 22% (with input VAT deduction rights).

The reduced VAT rates of 5% and 7% are generally beneficial when the amount of input VAT is relatively low.

If the company has substantial purchases and expenses generating significant input VAT, the 22% VAT rate with deduction rights is usually more advantageous.
If the share of a foreign shareholder – legal entity exceeds 25%, the company becomes ineligible for USN and must apply OSNO.

Double Taxation Treaties

Double taxation treaties (DTTs) may reduce withholding tax rates on dividends, interest, and royalties paid to foreign shareholders.

However, the application of treaties with 38 “unfriendly” countries (including the United States, the United Kingdom, EU member states, and others) has been suspended, and the standard withholding tax rates apply.

For shareholders from countries whose treaties remain in force (such as the UAE, China, India, and others), reduced treaty rates are available, provided that the recipient can demonstrate beneficial ownership of the income.

To start working with us or questions - WhatsApp/Telegram/Max: +7 (967) 170-68-30

E-mail: info@valen-legal.com

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