In a move that provides continuity for employers, Russia has maintained its single contribution basis cap for social and pension insurance contributions. Decree No. 1883, published in the November 10, 2023 Official Gazette, sets the 2024 cap at RUB 2,225,000.
Implications for Payroll and Tax Professionals
This decision has several implications for payroll calculations within Russia:
- Two-Tiered Contribution System: A combined contribution rate of 30% (comprised of 2.9% for social insurance, 22% for pension insurance, and 5.1% for medical insurance) will apply to salaries up to the cap of RUB 2,225,000.
- Reduced Rate Above Cap: For income exceeding the cap, a reduced combined rate of 15.1% (10% pension insurance and 5.1% medical insurance) applies.
- Simplified Calculations: The single cap, introduced in 2023, continues to streamline calculations compared to the previous system that utilized separate caps for social and pension insurance.
Understanding the Context
Russia’s decision to maintain consistency in its salary cap reflects a broader trend of stability within this aspect of its tax regime. International tax professionals should continue to monitor Russia’s tax code for any further changes that could impact their clients with business interests in the country.
Additional Considerations
It’s important to remember that this article focuses solely on the salary cap aspect of Russia’s social and pension insurance contributions. Payroll and tax professionals must also stay informed on other relevant regulations, including:
- Any regional variations in contribution rates or rules
- Potential changes to tax treaties that might affect cross-border employment situations
