Investment tax deduction

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/ Business / Support measures /

Investment tax deduction

Description

Investment tax deduction (ITB) is the reduction of profit tax by costs of purchasing, manufacturing, upgrading and reconstructing fixed assets.

THE LAW STATES:

ITD will be available for companies with the Moscow Investor Category 1 and 2 status
Investment in fixed assets related to depreciation groups 3-10 (except for depreciation groups 8-10 of buildings, structures, transfer devices)
Beneficial Profit Tax Rate:
12,5% for Moscow Investor Category 1 companies;
8% for Moscow Investor Category 2 companies.
The benefit provides for abating:
- regional tax - up to 90% of investments in fixed assets
- federal tax - up to 10% of investments in fixed assets
The unused amount of the regional benefit can be carried forward to max. 7 consecutive tax periods.

* - Transfer devices include facilities designed to transmit electrical, thermal and mechanical energy, liquid and gas substances, signals, information, etc. (e.g. heat and power networks, power transmission and communication lines, pipelines, if they are not part of the fixed asset).

MOSCOW INVESTOR STATUS CRITERIA

MAIN
ACTIVITY

MANUFACTURING

except for coke and oil products manufacturing

REVENUE FROM MAIN ACTIVITY

> 70%

AVERAGE SALARY IN THE COMPANY

rub 72,331

at least average monthly labor income from in Moscow (New Moscow factor - 0.74)

FIXED ASSET RENEWAL FACTOR

except for buildings and structures

> 8%

last year

> 35%

over the last 5 years

MINIMUM INVESTMENTS IN FIXED ASSETS

The fixed assets shall be put on the balance sheet in Moscow and located in buildings and units the applicant has the rights for

> rub 200 M A YEAR

MOSCOW INVESTOR CATEGORY 1

Tax rate - 12.5% (INSTEAD OF 17%)

> rub 300 M A YEAR

MOSCOW INVESTOR CATEGORY 2

Tax rate - 8% (INSTEAD OF 17%)

ITD INTRODUCTION GOALS

THE NEW SUPPORT MEASURE AIMS AT:

implementing prioritized areas of industrial development in Moscow,
developing and implementing innovative technologies,
renewing fixed assets and increasing investment activity,
replacing current benefits that will become invalid in 2023

Before January 1, 2023 companies can choose - either profit benefit as per the industrial complex (IC), Technopark (TP) status - now 13.5%, or ITD (at the same time ICs and TPs keep the property and land benefits).

The investment tax deduction may become an alternative to the federal Special Investment Contracts (complicated tender procedures for unique technology development and implementation contracts with a mandatory participation of the Russian Government).

MOSCOW INVESTOR STATUS PROCEDURE

A legal entity applying for the Moscow Investor status shall submit the following documents to the Moscow Department of Investment and Industrial Policy

LEGAL FRAMEWORK

Moscow Law # 28 ‘On Investment Tax Deduction’ as of November 20, 2019

Moscow Government Resolution # 630-PP ‘On Application Procedure for Investment Tax Deduction’ as of May 27, 2020

LIST OF DOCUMENTS:

Moscow Investor Status Application form approved by Moscow Department of Investment and Industrial Policy and published on the department’s official website.
Copies of documents confirming a person's authority to sign the application and to submit documents on behalf of the applicant.
Copy of the Rosstat report form (hereinafter - Rosstat is the Federal Service of State Statistics) with basic information on the applicant's activities in Moscow and certified by the applicant’s Executive Officer or an authorized person.
Copy of the report form with information on investment activities approved by Rosstat and certified by the applicant's Executive Officer or an authorized person.
Copy of the certificate confirming the main type of economic activity certified by the applicant's Executive Officer or an authorized person.
Copy of the clearing form for accrued and paid mandatory social occupational injury and disease insurance contributions and for costs of insured amount payments (Form 4-FSS) certified by the applicant's Executive Officer or an authorized person.
Copy of the company’s profit tax declaration certified by the applicant’s Executive Officer or an authorized person.
Copy of the Rosstat report form with information on the availability and movement of fixed assets (funds) and other non-financial assets certified by the applicant's Executive Officer or an authorized person.
Copies of documents confirming the costs of purchasing, constructing, manufacturing, delivery and commissioning fixed assets and confirming the costs of completing, retrofitting, reconstructing, upgrading, technical re-equipping fixed assets in the year of status application or for the last year preceding the year of status application.
Copies of fixed assets inventory cards for their operation at the applicant's production facilities located in Moscow.

DOCUMENT REQUIREMENTS:

The documents shall be submitted by the applicant in paper and in form of documents electronic images on electronic carrier.
The documents shall be readable, have all attachments, be numbered through, sewn together and certified by the applicant's Executive Officer or authorized person.
The documents specified in bullets 3-7 of this list of documents to be submitted to tax authorities, state extra-budgetary funds of the Russian Federation and Rosstat shall be submitted for the last calendar year preceding the year of status application and contain a receipt confirmation (mark) of the relevant state body, state extra-budgetary fund of the Russian Federation.
The documents specified in paragraph 8 of this list of documents to be submitted to Rosstat shall be submitted for the last 5 calendar years preceding the year of status application shall contain the Rosstat receipt confirmation (mark).

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Investment tax deduction

Description

THE LAW STATES:

MOSCOW INVESTOR STATUS CRITERIA

MAINACTIVITY

MANUFACTURING

REVENUE FROM MAIN ACTIVITY

> 70%

AVERAGE SALARY IN THE COMPANY

rub 72,331

FIXED ASSET RENEWAL FACTOR

> 8%

> 35%

MINIMUM INVESTMENTS IN FIXED ASSETS

> rub 200 M A YEAR

MOSCOW INVESTOR CATEGORY 1

Tax rate - 12.5% (INSTEAD OF 17%)

> rub 300 M A YEAR

MOSCOW INVESTOR CATEGORY 2

Tax rate - 8% (INSTEAD OF 17%)

ITD INTRODUCTION GOALS

THE NEW SUPPORT MEASURE AIMS AT:

MOSCOW INVESTOR STATUS PROCEDURE

LEGAL FRAMEWORK

MAIN
ACTIVITY