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Tax benefits

A Free Economic Zone has been operating in the territory of the Republic of Crimea since January 1, 2015, if an investment project is implemented by a participant of the Free Economic Zone, the following benefits and preferences shall apply to such an investor.
 

The tax rate for the tax to be credited to the federal budget is set at 0 percent in respect of profits received from the implementation of an investment project in a free economic zone, information about which is contained in an investment declaration that meets the requirements established by Federal Law No. 377-FZ "On the Development of the Republic of Crimea and the City of Federal Significance of Sevastopol and the Free Economic Zone in the Territories of the Republic of Crimea and the City of Federal Significance of Sevastopol" dated November 29, 2014, and is applied for ten consecutive tax periods starting from the tax period in which, according to the tax accounting data, the first profit was received from implementing the specified investment project in the free economic zone (Article 284 of the Tax Code of the Russian Federation).

The corporate income tax rate to be credited to the budget of the Republic of Crimea during the validity of the Agreement on the Terms and Conditions of Activity in the Free Economic Zone in the following amounts:

  • 6 percent – by types of activities carried out in the free economic zone in relation to profit received from implementing an investment project in the free economic zone, information about which is contained in the investment declaration that meets the requirements established by Federal Law No. 377-FZ "On the Development of the Republic of Crimea and the City of Federal Significance of Sevastopol and the Free Economic Zone in the Territories of the Republic of Crimea and the City of Federal Significance of Sevastopol" dated November 29, 2014, specified in the Annex to the Law of the Republic of Crimea No. 61-ZRK/2014 dated 29.12.2014;
  • 13.5 percent – for all types of activities carried out in the free economic zone, except for the types of activities specified in the Annex to the Law of the Republic of Crimea No. 61-ZRK/2014 dated 29.12.2014.
 

These tax rates are applied provided that the taxpayer maintains separate accounting of income (expenses) received (incurred) during the implementation of each investment project in the free economic zone and income (expenses) received (incurred) during the implementation of other economic activities (Law of the Republic of Crimea No. 61-ZRK/2014 "On Establishing the Corporate Income Tax Rate in the Territory of the Republic of Crimea" dated 29.12.2014, as amended)).

Organizations – in respect of the property accounted for on the balance sheet of the organization – participant of the free economic zone, created or acquired for performing the Agreement on the Terms and Conditions of Activity in the Free Economic Zone and located in the territory of this free economic zone, within ten years from the month following the month of balance sheet recognition of the said property shall be exempt from taxation.

In the event of termination of the Agreement on the Terms and Conditions of Activity in the Free Economic Zone by a court award, the amount of tax is subject to calculation and payment to the budget. The tax shall be calculated without taking into account the application of the tax privilege provided for by this clause for the entire period of implementation of the investment project in the free economic zone. The calculated amount of tax shall be payable upon expiration of the reporting or tax period in which the Agreement on the Terms and Conditions of Activity in the Free Economic Zone was terminated, not later than the deadlines established for the payment of advance payments of tax for the reporting period or tax for the tax period (Article 381 of the Tax Code of the Russian Federation).

Organizations – participants of the free economic zone – in respect of the land plots located in the territory of the free economic zone and used for performing the Agreement on the Terms and Conditions of Activity in the Free Economic Zone for a period of three years from the month of arising of the right of ownership to each land plot shall be exempt from taxation.

In the event of termination of the Agreement on the Terms and Conditions of Activity in the Free Economic Zone by a court award, the amount of tax is subject to calculation and payment to the budget. The tax shall be calculated without taking into account the application of the tax privilege provided for by this sub-clause for the entire period of implementation of the investment project in the free economic zone. The calculated amount of tax shall be payable upon expiration of the reporting or tax period in which the Agreement on the Terms and Conditions of Activity in the Free Economic Zone was terminated, not later than the deadlines established for the payment of advance payments of tax for the reporting period or tax for the tax period (Article 395 of the Tax Code of the Russian Federation).

For organizations and individual entrepreneurs who have received the status of a participant in the free economic zone in accordance with Federal Law No. 377-FZ "On the Development of the Republic of Crimea and the City of Federal Significance of Sevastopol and the Free Economic Zone in the Territories of the Republic of Crimea and the City of Federal Significance of Sevastopol" dated November 29, 2014, in respect of payments and other remuneration in favor of individuals involved in the implementation of an investment project in the free economic zone, information about which is contained in the investment declaration that meets the requirements established by Federal Law No. 377-FZ "On the Development of the Republic of Crimea and the City of Federal Significance of Sevastopol and the Free Economic Zone in the Territories of the Republic of Crimea and the City of Federal Significance of Sevastopol" dated November 29, 2014, reduced insurance premium rates – 7.6% (Article 427 of the Tax Code of the Russian Federation).

 
Moreover, if the investor is not a participant of the Free Economic Zone, reduced rates apply in the territory of the Republic of Crimea:
 

The tax rate is set at 1.5 percent for real estate facilities, the tax base for which is determined as the book value of the property and at 1 percent for real estate facilities, the tax base, taking into account the specifics established by Article 378.2 of the Tax Code of the Russian Federation, is determined as the cadastral value of the property (Law of the Republic of Crimea No. 7-RK/2014 "On Corporate Property Tax" dated 19.11.2014).

The following tax rates are set for the periods 2017 through 2023 for tax payable upon application of the simplified taxation system:

  1. 1) the tax rate shall be set at 4 percent if the object of taxation is income;
  2. 2) if the object of taxation is income reduced by the amount of expenses, the tax rate shall be set at the rate of 10 percent.
 

In relation to organizations that are right holders of computer programs included in the unified register of Russian computer programs and databases and (or) that received a document on state accreditation of IT companies, the main economic activity of which is at least one of the following:

 
  • 62.01 "Computer Software Engineering";
  • 62.02 "Consulting and work activities in the field of computer technology";
  • 62.02.1 "Computer systems planning, design activities";
  • 62.02.4 "Activities to prepare computer systems for operation";
  • 62.03.13 "Computer systems support activities";
  • 62.09 "Activities related to use of computers and information technology, other";
  • 63.11.1 "Activities related to the creation and use of databases and information resources",
 

and applying the simplified system of taxation, the following tax rates are established for the period of 2022 through to 2024 (Law of the Republic of Crimea No. 298-ZRK/2022 "On Amendments to the Law of the Republic of Crimea "On Establishment of the Tax Rate Payable upon Application of the Simplified System of Taxation in the Territory of the Republic of Crimea" dated 24.06.2022):

 
  1. 1) the tax rate shall be set at 1 percent if the object of taxation is income;
  2. 2) the tax rate shall be set at the rate of 5 percent if the object of taxation is income reduced by the amount of expenses.
 

In respect of social enterprises registered in the territory of the Republic of Crimea included in the Unified Register of Small and Medium Enterprises and applying the simplified taxation system, the following tax rates are set from January 1, 2023 (Law of the Republic of Crimea No. 430-ZRK/2023 "On Amendments to the Law of the Republic of Crimea "On Establishing the Tax Rate Payable upon Application of the Simplified System of Taxation in the Territory of the Republic of Crimea" dated 29.05.2023):

 
  • 1) the tax rate shall be set a 1 percent if the object of taxation is income;
  • 2) the tax rate shall be set at the rate of 5 percent if the object of taxation is income reduced by the amount of expenses.
 

When applying the taxation system for agricultural producers (unified agricultural tax), the tax rate is set at 4 percent (Law of the Republic of Crimea No. 60-ZRK/2014 "On Establishment of the Unified Agricultural Tax Rate in the Territory of the Republic of Crimea" dated 29.12.2014).

 

In accordance with Article 286.1 of the Tax Code of the Russian Federation in the territory of the Republic of Crimea, the right to apply the investment tax deduction in respect of the expenses of payers of corporate income tax to be credited to the budget of the Republic of Crimea is established:

 
  1. 1) in relation to fixed assets related to organizations or separate units of organizations located in the territory of the Republic of Crimea, the main activity of which is agriculture;
  2. 2) in the form of donations transferred to state and municipal institutions carrying out activities in the field of culture;
  3. 3) in relation to fixed assets related to organizations or separate units of organizations located in the territory of the Republic of Crimea, the main activity of which is manufacturing;
  4. 4) in relation to fixed assets related to organizations or separate units of organizations located in the territory of the Republic of Crimea, the main activity of which is activity in the field of communication;
  5. 5) in the form of the value of property (including monetary funds) donated to state-accredited educational organizations implementing basic educational programs (clause 5 was introduced by the Law of the Republic of Crimea No. 409-ZRK/2023 "On Amendments to the Law of the Republic of Crimea "On Investment Tax Deduction" dated 30.03.2023, which becomes effective after one month upon its official publication and applies to legal relations that have arisen since January 1, 2023).
 

The amount of the investment tax deduction for the current reporting (tax) period is 50 percent of the amount of expenses of the current period, except for the expenses for the liquidation of fixed assets, and cannot exceed the maximum amount of the investment tax deduction.

The rate for determining the marginal amount of the investment tax deduction for the current reporting (tax) period is 10 percent.

In respect of the expenses specified in clauses 2 and 5, the taxpayers are entitled to reduce the amounts of corporate income tax (advance payment) to be credited to the revenue part of the budget of the Republic of Crimea by the amount of investment tax deduction in the amount of 100 percent of the expenses ( Law of the Republic of Crimea No. 636-ZRK/2019 "On Investment Tax Deduction" dated 15.08.2019):

  • in the form of donations transferred to state and municipal institutions carrying out activities in the field of culture,
  • in the form of the cost of property (including monetary funds) donated to state-accredited educational organizations implementing basic educational programs.
 
 
 

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