Russian MinFin, Central Bank given until Oct to carry out further analysis of profit tax breaks for cos with free float of at least 15%

MOSCOW. Aug 26 (Interfax) - Russian Finance Minister Anton Siluanov has given his deputies in conjunction with the Central Bank until October to conduct a further analysis of profit tax concessions for companies with a free float of at least 15% and which have not applied other tax breaks, sources familiar with the discussion of the matter told Interfax.

This is one of the instructions given after a meeting chaired by the minister at the beginning of August.

The concession would apply to the portion of profit tax payable to the federal budget.

The corporate profit tax rate is 25% starting this year. The regional budgets receive 17% and the federal budget the other 8%.

The Central Bank came up with the idea of considering the possibility of reducing profit tax as an incentive for issuers to tap the equity capital market. Last year, the regulator proposed that the Finance Ministry and Economic Development Ministry look at lowering the tax rate by making concessions contingent on the size of the issuer's free float in combination with other indicators. The Central Bank did not specify who might take the hit - the federal budget or the regions.

"The Central Bank has submitted proposals to the government that have not yet received a response. The proposals were that those companies that go public and have at least 15% of their securities, their shares, in free float should receive tax breaks on profits, at a minimum. The proposal has not found support, though it seems promising to us. It is quite possible that if the government discusses the matter of a larger-scale entering of at least companies with state participation to the market, then perhaps the proposal will be revived," Central Bank First Deputy Governor Vladimir Chistyukhin told reporters on the sidelines of the Financial Congress in July.

Deputy Finance Minister Alexei Sazanov, commenting on the Central Bank's initiative last year, said this needed to be discussed with the regions, since profit tax is their revenue.