Some of the most important information for foreign investors when considering investment projects in countries concern the cost of labor and employment. We put together here a quick guide to payroll taxes and other employment costs in Russia.
the payroll tax structure is similar as in other countries in the region. The social
contribution the employer pays from the employees´ gross salary is relatively higher
in comparison with countries in the region. The employee´s income taxes are on
a comparable level when looking at neighboring countries.
standard limited liability company the payroll tax structure in Russia is as
follows (for convenience, we include as example a salary of 1000 units).
Employee´s monthly gross salary in their employment agreement: 1000 units
The company is liable to pay the following taxes:
- Compulsory social security contribution 30 %
Total company cost per month: 1300 units
The employee is liable to pay the following taxes (employer usually takes care of these on the employee´s behalf)
- Personal income tax 13 %
Total net salary received by employee: 870 units
interesting to know that companies registered as small and medium enterprises
may apply a lower social contribution rate of 15 %, which is applicable for payments
above the minimum wage. However, this registration is only available for companies
which fulfill very stringent conditions and is in most cases not applicable
even if the company is small in size.
A recent change in taxation stipulates that individuals earning over 5 million rubles per year need to pay a 15 % personal income tax contribution from the part that exceeds 5 million rubles.
the compulsory social security contributions are throttled lower after limits which
result in lower contributions paid by the employer when annual salaries exceed 912 000
The 13 % personal income tax applies to residents of Russia, while a 30 % rate is applied for non-residents. Foreigners who hold a highly qualified specialist work permit (HQS) are generally treated as tax residents and pay 13 % personal income tax.
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