On 7 August 2023, the President of the Russian Federation signed a law No. 414-FZ establishing a new federal tax of a one-time nature the excess profit tax. Taxation will apply to the surplus earnings of Russian companies, foreign entities classified as Russian tax residents, and foreign companies conducting business in Russia via a permanent establishment for the 2021-2022 fiscal year. The tax rate is set at 10%, and there is a possibility of early payment at a discounted rate of 5% during the window between 1 October and 30 November 2023. Payment of the tax is required no later than 28 January 2024.
Windfall tax will not apply to the following organizations:
- included as of 31 December 2022 in the unified register of small and medium-sized businesses;
- Russian entities established after 1 January 2021, unless they were formed through the reorganization of entities in operation before 1 January 2021;
- Foreign entities that started operations within the Russian Federation via permanent establishments after 1 January 2021;
- Enterprises engaged in the oil, gas, and coal mining sectors;
- who were memberships of the Group of Companies in 2022, which in 2022 included the above companies;
- Financial institutions, including both credit and non-credit financial organizations, for which bankruptcy prevention measures were implemented as of 1 January 2023;
- Entities that did not generate any revenue from sales during the income tax assessment periods in 2018 and 2019;
- Development firms engaged in projects financed by funds from individuals participating in shared construction and held in escrow accounts, but these firms did not distribute dividends in 2021 and 2022.
The Law will be effective starting on 1 January 2024
