Corporate Profit Tax: Structure and Calculation

Taxable Object

Corporate profit tax (CPT) is a direct tax on company profits. Object: profit = revenues - expenses.

Tax revenues = accounting revenues + normalized/non-normalized additions. Included: proceeds from sales, non-operating income (dividends, interest, foreign exchange gains, penalties from counterparties).

Tax expenses = all justified and properly documented expenses. Limitations: deductible expenses (advertising — 1% of revenue, representation — 4% of payroll, interest — key rate × 1.5), expenses with restrictions (social, sports).

Corporate Profit Tax Rates

Russia: base rate is 20% (3% — federal budget, 17% — regional). From 2025, an increase in the federal portion is planned. Preferential rates: IT companies (0%/3%), SEZ residents, agricultural producers, Skolkovo.

International rates: Ireland (12.5%) — historically low, attracted Google, Apple, Facebook. Hungary (9%). Netherlands (25.8%). Germany (about 30% including local taxes). UAE (0% until 2023; from 2023 — 9% over the threshold).

Differences Between Accounting and Tax Accounting

The two systems recognize revenues and expenses differently, creating temporary and permanent differences:

Permanent differences — expenses recognized in accounting but never accepted in tax accounting (excess deductible expenses).

Temporary differences — timing differences in recognition (depreciation — accounting vs tax; provisions for doubtful debts). Lead to deferred tax assets and liabilities (DTA/DTL).

Practical Assignment

Company for the year: revenue RUB 100 million, cost of goods sold RUB 60 million, commercial expenses (of which advertising RUB 3 million) RUB 10 million, representation expenses RUB 500 thousand (payroll = RUB 8 million), interest on loan RUB 1 million (rate 18%, Bank of Russia key rate at time of receipt = 16%). Calculate taxable profit and the amount of CPT payable.