Russia's Federal Tax Service (FTS) has issued a release on the relaxed conditions for the "ultra-low tax regime" for IT companies as per amendments provided by Federal Law No. 321-FZ of 14 July 2022 and Federal Law No. 323-FZ of 14 July 2022. The regime was introduced in 2020, including a reduction in the corporate tax rate and a reduction in social security contributions for qualifying IT companies. To qualify, the general conditions include:

• the company must have state accreditation as an organization engaged in information technology activities in accordance with the order established by the Russian Government;
• the share of revenue of the company from its computer programs, databases, the transfer of exclusive rights, licensing, etc., must amount to at least 90% of its total revenue for the reporting (tax) period; and
• the average number of employees during a reporting period must be at least 7 people.

As provided by the Federal Laws, the last two conditions are effectively relaxed. Although not mentioned in the release, conditions are established for the application of a 0% corporate tax rate for accredited IT companies in 2022 to 2024, as opposed to the 3% rate previously provided. The conditions include that the share of revenue (income) of the company from its computer programs, databases, the transfer of exclusive rights, licensing, etc., must amount to at least 70% of its total revenue for the reporting (tax) period, with no requirement regarding the number of employees. It is also provided that if, following the results of the tax period, a taxpayer does not comply with the 70% of revenue condition or losses its accreditation, such a taxpayer is deprived of the right to apply the tax rate provided for in this paragraph from the beginning of the tax period in which the condition is not met or the accreditation is lost. Further, it is provided that the 0% tax rate will not apply in any case for a company resulting from a reorganization (merger/division) after 1 July 2022 or for a company in which a direct or indirect participation of at least 50% is held by the state.

The same relaxed conditions and limitations are provided for the reduced social security contributions for accredited IT companies, which amount to 7.6%, including 6.0% for the pension contribution, 1.5% for temporary disability and maternity, and 0.1% for compulsory health insurance. The reduced rates themselves are not changed and it is not specified that they apply for just the period 2022 to 2024.