Uniform social tax has been replaced with insurance contributions to non-budgetary funds

From January 01, 2010 a uniform social tax (UST) shall be cancelled and instead of it insurance contributions to the Pension fund of the Russian Federation, the Fund of Social Insurance of the Russian Federation, the Federal Fund of Compulsory Medical Insurance and the Regional Funds of Compulsory medical insurance shall be introduced.

For the year of 2010 rates the total of which is equal to the current UST rate (26%) are set. Reduced rates (14%) are set for taxpayers applying simplified tax system. In this case the currently active descending tax scale as well as a number of benefits shall be cancelled.

From 2011 the rates of insurance contributions shall be increased and shall be:

In the Pension Fund of the Russian Federation – 26%; Social Insurance Fund – 2,9%; Federal Compulsory Medical Insurance Fund – 2,1%; Regional Compulsory Medical Insurance Fund – 3%.

For payers who make payments to individuals the basis for insurance fees charging in respect of each individual shall be the amount not exceeding 415 thousand rubles on a cumulative total starting from the beginning of an accounting period. This amount shall be subject to an annual indexation in accordance with increase of an average salary.

Powers related to insurance fees payment control shall be commissioned to the Pension Fund and the Social Insurance Fund.

Due to cancellation of UST and introduction of insurance fees amendments to a number of laws (including the Tax Code of RF) have been made and a number of standard by-laws have been adopted.