Tax Reform 2025: A Checklist for Companies

Tax laws are constantly changing, and the upcoming 2024-2025 tax reform brings significant adjustments for businesses.  To avoid unpleasant surprises and penalties, you need to prepare in advance.  This checklist will help your company assess its readiness for the upcoming changes.

General taxation regime

1. Increase in income tax rate:

The overall corporate tax rate increases from 20% to 25%.  It is important to understand that the increase affects only the part credited to the federal budget (from 3% to 8%).  The regional portion of the rate remains unchanged.

Revise your financial forecast, taking into account the increased tax burden.  Check that the settings in your accounting software are correct to reflect the new rate.

2. Taxation of income of foreign companies:

The withholding tax rate on payments to foreign legal entities is increased from 20% to 25%.  Please note: this does not apply to all types of income of foreign companies – some are taxed at different rates.  The specific rates for each type of payment should be clarified.

Consult a tax advisor to clarify the rates applicable to your specific payments to foreign partners.  Update contractual agreements with foreign companies if necessary.

3. IT benefits:

For IT companies benefiting from incentives, an income tax rate of 5 per cent (previously 0 per cent) is introduced from 2025 to 2030.

Assess the impact of this change on your profitability.  Develop a strategy to minimise your tax burden under the new conditions.

Simplified Taxation System (STS)

1. Changes in the limits of the simplified taxation system:

The following thresholds are raised from 2025:

• Basic income threshold for transition to the simplified taxation system: from 112.5 million rubles to 337.5 million rubles.
• Income threshold for application of the simplified taxation system: up to RUB 450 million.
• Average number of employees for application of the simplified taxation system: from 100 to 130 people.
• Fixed assets residual value threshold: from RUR 150 million to RUR 200 million.

Check whether your company’s indicators comply with the new limits.  If exceeding them is unavoidable, develop a plan to switch to the general taxation regime or other suitable systems.

2. Cancellation of the increased rates of the simplified taxation system:

The increased rates of 8% (income object) and 20% (income minus expenses object) are cancelled.  Only the basic rates remain: 6% and 15%.

Recalculate the tax burden taking into account the new rates.

3. New threshold for VAT payers:

If your income for the year exceeds 60 million rubles, you will be considered VAT payers from 2025.  You can choose one of two options:

• Applying standard VAT rates with the right to deduct.
• Application of reduced VAT rates (5% for income from 60 to 250 million roubles per year and 7% for income from 250 to 450 million roubles per year) without the right to deduct input VAT.

Analyse both options and choose the most favourable one for your company, taking into account the volume of purchases and VAT deductibility.