Investment tax deduction for business

The Federation Council has received a law that provides for a new type of tax deduction for investments. Companies can now receive a deduction of 25% of their expenses on projects related to technological development and economic adaptation.

An investment tax deduction is a tax benefit that is provided to companies for investing in certain projects. This is a way to encourage business and stimulate investment in key sectors.

Previously, common instruments of tax deductions in Russia included tax breaks, subsidies, preferential loans, as well as measures to stimulate investment in various sectors of the economy. Investment deductions and support measures were generally regulated by various laws and regulations.

Now the deduction will be provided to companies that have entered into an agreement with the region to implement a project that meets the requirements of technological development in Russia. It will only include capital expenditures up to 25% of the total. Regions will not be able to limit the amount of costs, establish categories of items for deduction, or prohibit the transfer of unused balances to future periods.

The deduction will be valid for companies included in the register of technological development and economic adaptation projects, as well as for investment projects that meet the criteria established by the government. It applies to fixed assets put into operation no later than 5 years from the date of conclusion of the investment agreement.

The introduction of an investment tax deduction in Russia could have a significant impact on the economy. First, it will create a powerful incentive for companies to invest in projects related to technological development and economic adaptation, which helps improve the country’s competitiveness. Second, supporting investment can lead to more jobs and growth in key industries. The third aspect is to stimulate technological progress, which in the long term can improve the country’s innovation capacity. In addition, this also helps to attract foreign investment, strengthening Russia’s position in the world market.

If adopted, the law will come into force on January 1, 2024.