World’s lowest tax rates to be applied in Russia’s IT industry

“The past months have shown clearly the importance of IT industry and how much promise it holds for steady growth of modern economy. For IT companies it is proposed to drastically reduce the insurance premium rate down to 7.6% and income tax to 3% from the current 20%,” Russian Prime Minister Mikhail Mishustin said at a videoconference of the government. “This will be one of the world’s lowest tax rates and this move seeks to achieve two key goals. First, the tax burden of the domestic companies doing business in Russia should not exceed the tax burden of foreign companies that are making profit from the sources located in our country. Second, doing business on international markets should make more economic sense if done from Russia than any other country, to which domestic entrepreneurs may emigrate, physically or infrastructurally.”

As for the economy in general, “The government will make RUR 20 bln ($290 mio) in the form of a dedicated subsidy available to small- and medium-sized enterprises and socially oriented NGOs. These funds will support about 500K enterprises with a total number of over 1.5 mio employees. Getting a subsidy is a no-brainer. All an entrepreneur needs do is go to his/her member area on the taxation service’s official website and contact a tax service official.”

The cabinet also discussed supporting national agriculture. According to the Prime Minister, “Overall, the agricultural sector has reported very good results. Last year, we had an excellent grain harvest, over 121 mio tons or 7% larger than the year before. The purchase of agricultural equipment increased by over 30% year on year, over 500K hectares of land have been made available to farmers after amelioration, over 5K new small and medium-sized farming businesses have been established, and the share of food produce and agricultural raw materials in Russia’s exports increased to 6% in 2019.”

As he noted, successful growth of agriculture requires “development of rural areas, the construction and repair of roads, schools and rural health stations, as well the necessary infrastructure. To date, more than 60% of homesteads in rural areas have been connected to a gas supply system, and access to running water has increased to nearly 68%.”

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