Jul 31, 2020
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Putin signs law on tax cuts for IT companies

President Vladimir Putin approved a law on tax maneuver for the IT industry. In addition, it simplified the procedure for recognizing individuals as tax residents of Russia.

Relevant document published on the official portal of legal information. The law passed three readings of the State Duma, was approved by the Federation Council and comes into force on July 31.

At the end of June, Russian President Vladimir Putin proposed to conduct a tax maneuver in this industry, including indefinitely reducing the rate of insurance premiums of companies from 14% to 7.6%, and the rate of income tax from 20% to 3%. The document submitted to the State Duma was developed in pursuance of this order and includes the introduction of such innovations from 2021.

As wrote, on July 10, the Russian Ministry of Finance published explanations for the maneuver in the IT industry. According to the document, electronics manufacturers will also be affected by it.

According to the executive director of the Association of Developers and Manufacturers of Electronics Ivan Pokrovsky, market participants do not yet understand how this benefit will work. Initially, they asked the government for tax cuts.

In turn, the head of the Ministry of Finance Anton Siluanov drew attention to the fact that the tax maneuver also includes a revision of the procedure for exempting the industry from VAT. He clarified that it is planned to exempt from VAT the implementation of exclusive rights to programs that are included in the Unified Register of Computer Programs and Databases, which "will improve the targeting of this benefit."

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