Software Sales Tax in Russia 🇷🇺

How do I solve my tax liability?
Agony Rating
Sales Tax Rate
Taxable Goods
Highest Penalty

How likely am I to get caught for owing sales tax in Russia?

Almost certainly. Russia doesn’t have a threshold for sales tax. The sale of software and digital goods is taxable from the first sale for both B2B and B2C companies.

What is the sales tax threshold in Russia?

There currently isn’t a threshold for sales tax in Russia, meaning you’re liable from your very first sale into the country.

Is SaaS taxable in Russia?

Yes. You owe tax for the sale of cloud software subscriptions to customers in Russia.

Are software downloads taxable in Russia?

Yes. You owe tax for the sale of software downloads to customers in Russia.

Are eBooks taxable in Russia?

Yes. You owe tax for the sale of eBooks to customers in Russia.

Are digital downloads taxable in Russia?

Yes. You owe tax for the sale of digital downloads to customers in Russia.

Registering for VAT in Russia

😬🌶️🌶️ It's complicated

The registration process in Russia is, theoretically, quite straightforward. However, you  will need someone to translate your company registration documents into Russian for you. This person will also need to have a stamp, marking them as an official translator, authorized to perform such services. 

The documentation and communication that you will receive from the tax authority will also be in Russian – so without someone who understands the local language, a seemingly simple process becomes increasingly complex!

Filing & Remittance of VAT in Russia

😐🌶️ It's not that complicated

Filing in Russia is straightforward, however, when it comes to paying sales taxes it gets a bit more difficult. 

The tax authority has only recently introduced the ability for payments to be made by card. Before that, the only way to pay was by bank transfer – which could easily fail due to issues with local and intermediary banks. If there was an issue, you could face a fine for late payment, even if you had submitted it on time. 

Even now, the card payment option has limits: a transaction limit and also a daily limit on how much you can pay. This means that you need to make and track payments incrementally, ensuring that the sum of all the payments totals the amount owed and that the funds reach the tax authority on time.

Penalties for VAT non-compliance in Russia

😩🌶️🌶️🌶️ It's crippling to the business / person

Russia has very strict sales tax regulations. If you’re late with a payment or have miscalculated something, you’ll be put straight into an audit process with set deadlines and penalty charges of up to 40% of the total amount owed. 

Failing to register for VAT can quickly land you trouble with the tax authority. If you sell without a valid VAT registration and your VAT liabilities exceed RUB 1.5million  (~$19,000), you could face criminal liability for illegal business activities.

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