All taxpayers are required to obtain tax registration and be assigned a taxpayer identification number, irrespective of whether their activities are subject to Russian taxation.
The taxable period runs from 1 January to 31 December.
An annual CIT return must be filed by 28 March of the year following the end of the reporting year.
Payment of tax
Companies pay advance CIT payments on a monthly or quarterly basis. The final payment for the year is due by 28 March of the following year.
Tax audit process
Tax dispute resolution at the pre-trial (administrative) stage
Tax disputes happen quite frequently in Russia. Most corporate taxpayers have to go through the tax litigation process at least once while doing business in the country.
At present, if taxpayers seek to challenge decisions and other documents/actions (or failure to act) of the tax authorities in court, before going to court, they must first contest such decisions/actions with the relevant higher tax office.
In recent times, tax disputes have been increasingly resolved at the pre-trial (administrative, superior tax office) stage. However, taxpayers cannot formally negotiate tax audit results or enter into formal settlement agreements with the tax authorities at the pre-trial stage. So, in many cases, they still must litigate in order to uphold their rights.
Tax dispute resolution in court
Taxpayers can file claims against the tax authorities through arbitrazh courts (i.e. courts that review and resolve economic disputes mainly among legal entities/entrepreneurs or between legal entities/entrepreneurs and state authorities, including the tax authorities). Claims may be filed with a court within three months after a contested decision takes effect or within three months after a taxpayer discovers that its rights have been violated (provided that the taxpayer has already sought redress through the mandatory pre-trial stage mentioned above).
Courts of the first instance (first level) initially review disputes and issue decisions. Decisions of a first instance court can be appealed to appellate courts (second instance or level) and cassational courts (third instance or level). If litigation goes through all three instances (levels), the process usually takes up to a year.
Resolutions/decisions of courts at these three levels may be appealed to the Russian Federation Supreme Court (as a supervisory authority). However, in practice, very few such disputes are actually heard by the Supreme Court.
Statute of limitations
The statute of limitations is established for three years. For example, tax authorities may examine 2019, 2018, and 2017 CIT returns by conducting a site tax audit in 2020.
Topics of focus for tax authorities
The recent court practice demonstrates that tax authorities concentrate on (i) tax evasion schemes and relationships with bad faith suppliers , (ii) financing structures and thin capitalisation rules, (iii) passive income (e.g. interests, dividends, royalties) paid abroad, and (iv) deductibility of intragroup charges.
Tax monitoring is a form of tax control stipulating extended informational interaction between taxpayer and tax authorities aimed at accurate calculation of taxes and insurance contributions. Criteria for entering tax monitoring regime will be reduced as follows since 1 July 2021:
- The tax threshold will be reduced to RUB 100 million. Personal income tax (PIT) and insurance contributions may be added to the calculations.
- The income threshold will be reduced to RUB 1 billion.
- The asset threshold will also be reduced to RUB 1 billion.