Planned Minimum Tax for International Groups of Companies in Russia

The Russian Ministry of Finance has prepared a draft law (Project ID No. 157161) introducing a minimum tax of 15% for Russian subsidiaries of international groups of companies (IGC). The draft is currently undergoing public discussion and is expected to be subsequently submitted to the relevant committees and then to parliament for further consideration. The draft has been developed in response to the international "Pillar 2" rules, which establish a global minimum corporate tax rate of 15% for IGCs.

Subsidiaries of foreign corporations that meet the criteria outlined below and pay profit tax in Russia at an effective rate of less than 15% will be required to make a top-up tax payment to meet this rate.

Although Russia's standard profit tax rate has been 25% since January 1, 2025, a wide range of tax incentives allows many companies to benefit from reduced rates (for instance, a preferential 5% rate is available for IT companies). Special investment contracts (SPIC 1.0 and SPIC 2.0) also provide numerous foreign corporations with profit tax benefits. If these amendments are adopted, the benefits will likely be effectively capped at a 15% rate. The Russian government's rationale is as follows: if corporations are obligated to pay the top-up tax in their parent company's home jurisdiction regardless, thereby nullifying the economic benefit of the incentive, it is preferable for this tax differential to be collected directly in Russia.

The draft law applies to subsidiaries of international corporations if the following conditions are met:

• The ultimate parent company of the group is resident abroad;
• The group's consolidated revenue exceeds EUR 750 million.

This mechanism is analogous to the Qualified Domestic Minimum Top-up Tax (QDMTT) under Pillar 2. The Pillar 2 rules have been implemented since 2024 by numerous countries for the purpose of ensuring minimum taxation of international corporations and are already in effect, for example, across all EU member states.

However, there is a risk that the Russian QDMTT analogue may not be recognized by other jurisdictions as qualifying under the Pillar 2 framework. This could result in double taxation for corporations, meaning they could be obligated to pay a top-up tax to 15% both in Russia (under the proposed QDMTT-like rules) and abroad (under the Pillar 2 Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR).

At this stage, it is advisable for companies to conduct a joint assessment with other group entities in Russia to proactively calculate their effective profit tax rate, analyze applicable tax benefits, and model the potential financial impact of a top-up tax liability in Russia.