Russian President Vladimir Putin signed a law establishing excess profit tax for large companies, whose arithmetic average profit margin for 2021-2022 exceeds RUB 1 billion (so called windfall tax).

The windfall tax rate will be 10% of the difference between companies' average profit for 2021-22 and their profit for 2018-19. However, if a security payment is made within the period from October 1 to November 30, 2023, the tax amount can be calculated at the rate of 5%, so a 50% tax discount to be provided.

This is lump-sum payment to be paid no later than January 28, 2024 and credited to the federal budget exclusively. There are exemptions from the windfall tax for a series of sectors:

• SMEs and Single Agricultural Tax payers;
• a number of oil and gas companies and those engaged in the coal industry;
• companies with no operating income obtained in 2018-2019, as well as credit organizations and NFOs, in respect of which, as of January 1, 2023, measures were taken to prevent bankruptcy.

In addition, mechanism for calculating the tax base is established for the cases if windfall tax is accrued as a result of a tax audit, as well as the procedure for determining the tax liability in case of filing an adjusted tax return.

The law comes into legal force on January 1, 2024.

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