When moving to a preferential region, companies shall still pay taxes at the old rate

Companies that move their operations to regions with low rates under a simplified tax system (STS) will continue to pay taxes on old terms for three years.

It refers to certain regions as the Republic of Kalmykia, Murmansk Oblast, the Chechen Republic and some other regions.

Such a legislative proposal was introduced to the State Duma, and is aimed at preventing attempts of companies to move to regions with artificially low tax rates.

If a company moves to a subject of the Russian Federation with a reduced STS rate, then for three years it will be burdened with tax at the rate that was in effect at the previous place of registration.

According to the explanatory note to this legislative proposal, such changes are aimed at eliminating the practice of unjustified re-registration of businesses in those regions where reduced tax rates have been already established for taxpayers using STS. The amendments are planned to be adopted before the beginning of December 2024, and they may come into force on January 1, 2025.