Russian govt agrees upon procedure for federal investment tax deduction at 3% - PM Mishustin

MOSCOW. Nov 11 (Interfax) - The Russian government has agreed upon the procedure for applying the federal tax deduction at 3%, and the procedure enters into force on January 1, 2025, Prime Minister Mikhail Mishustin said during a meeting with his deputy prime ministers.

"A decision has been reached on the launch and procedure for applying the federal investment tax deduction that comes into force on January 1 next year. Enterprises that invest in their own development may deduct 3% of these expenses from the payment of profit tax," Mishustin said.

Mishustin said that the tax deduction would be available to organizations that operate in specific areas, including a number of those in manufacturing, commercial mineral mining, research and development, providing consumers with electricity and gas, as well as catering services, and the hotel business.

"We are counting on the measure to assist entrepreneurs in reducing costs to purchase and upgrade fixed assets; increase efficiency in implementing projects; and solidify the positions of domestic companies on the local market, as well as on foreign markets," Mishustin said.

As reported, the Finance Ministry has envisaged 150 billion rubles in the 2025 federal budget in order to finance the federal investment tax deduction.

Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), said that companies had initially estimated the increase in the profit-tax deduction required to compensate for investing in assets at 500 billion rubles, then reduced the estimate to 300 billion rubles, then to 200 billion rubles, and then to the final version of 150 billion rubles. Shokhin said that this amount would be acceptable for the pilot year of 2025, though he has expressed hope that the amount would rise in subsequent years.