Although personal income tax in Russia is one of the lowest in the world at 13%, the total tax burden levied directly or indirectly on Russians is several times higher, experts say.
In addition to personal income tax, the employer pays 22% of the employee’s salary to the Pension Fund, kp.ru reports. Over 5% goes to the Compulsory Medical Insurance Fund. There is also accident insurance premium ranging from 0.2% to 8.5%. According to Yelena Zyryanova, chief tax consultant at the ICPC audit company, personal income tax is withheld directly from the worker’s salary, while the other contributions are paid by the employer.
“The employer’s and the employee’s money is actually the same thing,” says tax expert Nikolai Yepikhin, director of the Uproshchyonka (‘simplified taxation system’) website. “This means that nearly 100% of taxes and contributions are borne by the employee. Without these payments, suppose, the company could have paid the worker RUR100; but having to pay all the taxes, it just cuts their potential salary to about RUR 50.”
In addition to the payroll tax, Russians pay individual property taxes (on their apartments, summer cottages or garages) and the vehicle tax. On top of that, there are also the VAT (hiked from 18% to 20% in January) and various excise taxes, as these taxes affect the prices of goods.
“The tax burden already takes up about a half of people’s incomes,” Nikolai Yepikhin says. “And it is steadily increasing, and will obviously exceed 50% a few years from now.”