Law on a one-time tax on excess profits of large companies

The Internet portal of legal information published Federal Law No. 414-FZ dated 04.08.2023 on a one-time tax on excess profits of large companies, which will be obliged to pay 10% of the excess of profits for 2021-2022 over the figure for 2018-2019. The introduction of the excess profits tax has been approved by the Ministry of Justice. The tax will have to be paid by companies that have an average pre-tax profit for the period exceeded 1 billion rubles. The tax is due no later than January 28, 2024; however, if companies pay by November 30, 2023, the rate will be halved.

The funds received will be credited to the federal budget. Russian President Vladimir Putin has already signed this law.

The law provides exceptions for certain companies. For example, small and medium-sized businesses, oil and gas companies, coal miners, as well as construction companies that implement projects involving funds from citizens through escrow accounts are exempt from paying such tax.

Companies that did not pay dividends in 2021-2022 will also be exempt from the tax. Also included in the exemptions are companies that had no proceeds from the sale of products in 2018 and 2019, as well as banks in bankruptcy. The tax will not apply to companies established after 2020 and companies whose average before tax profit for 2021-2022 does not exceed 1 billion rubles.

It is up to the companies themselves to calculate the amount of excess profit tax. If a company is able to remit this tax from October 1 to November 30, 2023, it will be able to reduce it to an effective rate of 5%. This solution is proposed to be realized through a tax deduction in the draft law.

Alexei Sazanov, deputy finance minister, said that in case of a Russian budget deficit in the future, the authorities may levy the excess profits tax again. He noted that other tax policy changes will depend on the size of the future budget deficit and the sources of its financing. According to government reports, the excess profits tax is expected to bring 300 bln rubles to the treasury.