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Corporate Income Tax
Corporate Income tax is the major tax on business income (nalog na pibyl' organizacij, CIT). Dividend distributions are taxed by way of 'withholding'. Legal entities registered under Russian laws are liable to tax on their worldwide income. Foreign legal entities are subject to taxes only on income derived from business activities of a permanent establishment (branch) within Russia and on certain particular Russian-source income. All types of income are included in gross income.
Unless specifically exempted from taxation all income composed of the following is taxable:
From 2002 the accrual method generally applies.
All documented and economically justified expenses are deductible unless specifically disallowed for deduction by the Tax Code. Branch offices of foreign legal entities may deduct related expenses incurred by their Headquarters if allowed by the relevant international treaty on double tax avoidance (DTT).
Tax payment and reporting may either be monthly or quarterly as the taxpayer wishes.
Withholding Tax and Tax Agent Obligations
A resident company paying dividends (to any company) and interest, royalties and similar (to a foreign company without presence in Russia) is required to withhold tax at source. DTTs generally establish lower withholding tax rates.
Withholding tax is reported by the tax-withholding agents together with Corporate Income tax.