Extension of profit tax breaks for IT cos depends on situation with regional budgets - minister

MOSCOW. Nov 29 (Interfax) - The issue of extending the zero profit tax rate for information technology companies is being actively discussed, but the ultimate decision will depend on the actual situation with regional budgets, Russian Digital Development Minister Maksut Shadayev said at the Chamber of Commerce and Industry.

The zero profit tax rate for IT companies and makers of software and hardware systems included in the registry of Russian software is currently set to expire at the end of 2024 and go up to 3% in 2025. Shadayev said in October that he planned to lobby for the extension of the tax break.

But on Tuesday he said the decision on the extension will be made depending on the economic situation in Russia's regions, since profit tax revenue goes to regional budgets.

"In general, the discussion is very active. But I think that the decision on [the tax break's] extension will be made taking into account the actual state of budgets, because, as you recall, the profit tax is primarily a regional tax. In other words, these are funds that go into the budgets of the regions. And in this sense, depending on how the economy feels, as I understand, the decision on whether this tax break will be extended will be made depending on this," Shadayev said.

Other preferences for IT companies will probably be maintained, he said. "All other preferences - in our understanding the likelihood of their preservation is very high. Some of the preferences do not have expiration dates and some, I think, we'll manage to preserve," Shadayev said.

IT companies accredited by the Digital Development Ministry enjoy a number of measures of support, including tax breaks, reduced social security contribution rates, subsidized loans, exemptions from inspections and subsidized mortgage loans for employees, among others.