Russia is no exception. Moreover, with frequent changes and a set of tax rules different from those in the United States, Russian tax laws are viewed with great apprehension by most Americans and other foreigners doing business in Russia. Russian tax rules certainly have major drawbacks. Some of the most significant are the stiff penalties for underpayments of tax.
Penalties can easily exceed the actual tax liability by a factor of two or three.
Due to the lack of a well set-up appeals system, these high penalties are easily manipulated by tax inspectors. Too many taxes Other problems with Russian taxes include too many types of taxes, both on the federal and on the local level. This multitude of taxes not only makes compliance difficult, but also makes it challenging to keep current with changes and amendments. Add to the confusion presidential decrees which append taxes onto existing law or modifying existing laws, as well as the wide variety of taxes that may be enacted at the local level. Additionally, there are five different payroll taxes on top of the individual income tax that must be withheld by employers from wages paid to employees.