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. Last Updated: 07/27/2016

Tolls, Taxes and Tariffs: From Property to Pets

It is hard to find anything in Russia that is not subject to some fee or tax. Even pet owners must pay for keeping a dog or a cat at home, although birds and fish appear to be tax free. Anyone doing business must expect many more taxes, duties and fees.


All companies doing business in Russia, including joint ventures and foreign investors, are subject to the profits tax for which the most common rate is 32 percent. Companies with any Russian ownership, including joint ventures, may not deduct as expenses wages paid to Russians exceeding four times the minimum wage, and actually must pay an additional tax of 50 percent on any such wages exceeding eight times the minimum wage.


Employers of Russians, including foreign companies, also must contribute to pension, medical and unemployment funds at a current total amount of 37 percent of wages.


Dividend and interest income of companies is subject to a 15-percent tax. This applies to foreign companies which receive payments from Russian sources, even if they do not conduct business in Russia, unless the companies are based in certain countries like Cyprus.


Virtually every transaction in Russia now is subject to value-added tax at a rate of 20 percent. Even capital contributions that foreign investors make in forming Russian companies are taxed.


Capital contributions are still exempt from import duties, as are goods imported temporarily or for use by individuals or representation offices. Otherwise, the minimum duty is 5 percent and the maximum is 100 percent. Exporting raw materials also requires paying duties, although some oil joint ventures have obtained exemptions until they repay loans and/or investments.


Any company using Russian roads must pay the road tax of 0. 4 percent of gross turnover and the property tax of up to 1 percent applies to all but consumable property of companies. Extracting natural resources requires royalty payments and contributions to the replenishment fund.


The property tax represents a new trend of local taxation whose precise rates are set by regional authorities and thus may vary. Areas of Russia that have declared some form of independence like Tatarstan and Sakha try to impose their own taxes which they sometimes claim replace Russian taxes.


Perhaps the only thing that Russia does not have a tax for is capital gains. These are taxed at the same 32-percent rate as regular income, rather than at a lower rate as in countries like the United States.


Alexander Papachristou, attorney at White & Case, has practiced law in Moscow for 41/2 years.