Tax Rate Changes Effective January 1, 2025: What You Need to Know

Important changes to tax rates will come into effect on January 1, 2025. Learn how these new regulations will impact corporate taxation and financial reporting.

Auditors report the following:

Federal Law No. 176-FZ of July 12, 2024, “On Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation, and Recognition of Certain Provisions of Legislative Acts of the Russian Federation as Invalid” introduces changes to the corporate income tax rates effective January 1, 2025.

• The corporate income tax rate will increase from 20% to 25%. Part of the tax amount, calculated at a rate of 7% (8% from 2025 to 2030), will be allocated to the federal budget (Clause 1, Article 284 of the Tax Code).
• Russian organizations included in the register of small technology companies may be subject to a reduced regional tax rate from 2025 to 2030, as determined by the laws of the respective regions (Clause 1.8-5, Article 284 of the Tax Code).
• For IT companies, the federal tax rate will increase from 0% to 5% from 2025 to 2030, while the regional tax rate will remain at 0% (Clause 1.15, Article 284 of the Tax Code).
• Organizations holding licenses for subsoil use will have a tax rate of 20% for profits from subsoil development activities effective January 1, 2025. This rate applies under the conditions outlined in Clause 1.17-1, Article 284 of the Tax Code.
• The tax rate on all income of foreign organizations not related to activities in Russia through a permanent establishment will increase from 20% to 25% effective January 1, 2025 (except for income specified in subparagraphs 2-4, Clause 2, Clauses 3, 4, and 4.3 of Article 284 of the Tax Code).

We also draw your attention to the requirements of RAS 18/02 “Accounting for Income Tax Calculations,” which must be considered when preparing the 2024 annual financial statements:

• As stated in paragraphs 14 and 15 of RAS 18/02, changes in the amount of deferred tax assets/liabilities during the reporting period are equal to the product of temporary differences that arose (or were reversed) during the reporting period and the corporate income tax rate effective at the reporting date. If tax rates change, deferred tax assets/liabilities must be recalculated as of the date preceding the effective date of the new rates, with the resulting difference recognized in the profit and loss account.

Additional guidance on recalculating deferred tax assets/liabilities in connection with changes to tax rates can be found in BMC R-4/2008-KPR, “Changes to Corporate Income Tax Rates,” which states:

“The event that triggers changes to the valuation of deferred tax assets and liabilities is the legislative establishment of a new tax rate (the adoption of the relevant federal or regional law), not the effective date of the new tax rate. Therefore, the effect of the tax rate change must be reflected in the financial statements for the period in which the new tax rate was legislatively established, which precedes the period in which the new tax rate becomes effective. Recalculation should only be applied to temporary differences remaining outstanding at the reporting date prior to the effective date of the new tax rate.”