In recent years, Russia has introduced an ambitious set of tax incentives designed to fuel the growth of its IT sector. These policies are not just about reducing tax burdens—they’re about transforming Russia into a thriving, innovation-led digital economy. From VAT exemptions to a 0% profit tax for software firms, these measures provide a compelling reason for IT companies to establish and expand operations in Russia.
Let’s break down these incentives, how they work, and—most importantly—how your company can qualify.
Key Tax Incentives for the IT Sector
VAT Exemption for Software Licensing and Transfer
What’s the benefit?
The standard 20% VAT is fully exempted on the transfer or licensing of intellectual property (IP) rights for software.
Important Exception:
Software used for marketplace operations (intermediary platforms or advertising systems) is not eligible for VAT exemption.
Conditions for Eligibility:
- The software must be included in the Registry of Russian Software.
- The company must meet nine qualification criteria to enter the Registry.
- The key criterion: Over 51% of the company must be Russian-owned.
Reduced Social Contributions: Only 7.6%
What’s the benefit?
Instead of the usual 30%, IT companies can pay only 7.6% in social contributions, significantly lowering payroll-related expenses.
Conditions to Qualify:
- The company must operate in an approved IT field listed by the Ministry of Digital Development.
- IT-related revenue must exceed 70% of total company revenue.
- The average salary paid must be above the national average in Russia.
This incentive especially benefits mid-sized IT firms and startups hiring highly qualified specialists.
Zero Profit Tax for 2023–2024
What’s the benefit?
Eligible IT companies pay 0% profit tax for 2023 and 2024. That’s a full exemption from the usual 20% corporate tax rate.
Conditions for Eligibility:
- Obtain a license from the Ministry of Digital Development (IT Ministry).
- Maintain a Russian-language website detailing the company's IT services.
- At least 30% of the company's revenue must come from IT services.
- The company must operate within approved IT activities.
- The IT share of revenue must exceed 70% of total business income.
These criteria aim to ensure support reaches genuine IT enterprises, not holding companies or subsidiaries without active tech operations.
Why These Incentives Matter
- Substantial cost savings on taxes and payroll obligations
- Increased competitive edge for Russian-based IT businesses
- Incentives encourage localization and domestic software development
- Supports the growth of high-tech jobs, software exports, and local innovation
The broader goal is to create an ecosystem of globally competitive IT companies rooted in Russia.
How to Qualify for IT Tax Incentives
Here’s how companies can begin taking advantage of these opportunities:
Step 1: Register Your Software in the Registry of Russian Software
- Submit an application via the Ministry of Digital Development’s portal.
- Provide documentation proving:
- The ownership structure (≥51% Russian)
- Technical specifications of the software
- Source code availability (for verification)
Meeting all nine inclusion criteria is required for approval.
Step 2: Obtain IT Ministry Accreditation
- Apply for official IT company status through the Ministry
- Show:
- Proof of 30%+ IT revenue
- Evidence of salaries exceeding the national average
- Website in Russian outlining core services
- Regularly report updated data to maintain eligibility
Staying compliant ensures continued access to tax exemptions and social contribution reductions.
Benefits for IT Companies
Companies that qualify enjoy:
- Lower operating costs, freeing up capital for R&D or expansion
- Improved investor appeal, thanks to favorable financial metrics
- Opportunity to scale faster and hire better talent
- Advantage in global markets through stronger margins and innovation incentives
Whether you're a startup or a seasoned firm, these benefits can significantly enhance business viability.
Challenges and Considerations
- The registration process can be administratively intensive
- Companies must carefully track revenue streams and activity classifications
- It’s vital to stay up-to-date with regulatory changes to maintain benefits
- For joint ventures or foreign-backed companies, ownership thresholds may be a hurdle
Working with legal or tax consultants can simplify these complexities.
Frequently Asked Questions (FAQs)
What is the Registry of Russian Software?
A government-maintained list of approved domestic software eligible for tax benefits.
Can foreign-owned companies qualify?
Only if they have at least 51% Russian ownership—directly or through a compliant holding structure.
How can a company prove it meets the IT revenue threshold?
By submitting financial statements and breakdowns of revenue sources to the Ministry.
Are there penalties for non-compliance?
Yes. Companies may lose benefits and face audits or back taxes.
What happens after 2024 for the profit tax exemption?
The current law covers 2023–2024. Future extensions are possible but not guaranteed.
How does this compare internationally?
Few countries offer zero profit tax + VAT exemption + reduced social contributions—making Russia’s IT tax regime highly competitive.
Conclusion
Russia’s tax policies for the IT sector are not just generous—they’re strategic. By offering VAT exemptions, profit tax breaks, and reduced social contributions, the government is signaling strong support for tech-driven growth.
For companies ready to commit to the Russian market and meet eligibility criteria, these incentives represent a golden opportunity to expand, innovate, and thrive.
Call to Action
Want to unlock these powerful IT tax incentives in Russia?
👉 Contact our tax advisory experts for step-by-step support on registration, compliance, and strategy.
