The Ministry of Economic Development has developed new conditions for the deduction of investments from income tax

The Ministry of Economic Development has proposed introducing a 6% deduction on investments (this will allow the company to reduce its profit tax, rather than its tax base).

FINV will be available to companies in the following industries: “mining”, “manufacturing”, “supply of electricity, gas and steam; air conditioning”, “hotel and catering establishment activities”, “scientific research and development” (R&D).

The deduction will not be available to foreign organizations recognized as tax residents of Russia, participants of the Agreement on the Protection and Promotion of Investments, banks and manufacturers of excisable goods (including alcohol and cigarettes). In addition, a company will not be able to simultaneously reduce income tax at the expense of the Financial Institution and make deductions for depreciation of investments.

In one year, it will not be possible to receive more than the amount corresponding to the 5% tax rate credited to the federal budget. The excess can be used as a deduction over the next 10 years.

It will also be possible to transfer the FINV to the balance sheet of another company in the group. In the draft resolution, the Ministry of Economic Development proposed to establish criteria according to which an organization can be classified as a group (for example, if a company entitled to a deduction has a share in the organization of more than 50%).

Investments that will qualify for FINV include expenses for the creation, acquisition and modernization of fixed assets (machinery and equipment with a useful life of three years) and intangible assets (exclusive rights to inventions, utility models, industrial designs). registered in the relevant state registers).

The opportunity to receive a deduction will appear in 2025. The measure will cost the federal budget 200 billion rubles a year, which will correspond to about 10% of the annual additional income tax revenues resulting from an increase in the rate from 20% to 25%.

FINV was announced by Russian President Vladimir Putin in June, when he spoke at SPIEF. The country’s head of state stressed that the deduction could encourage companies to invest in development.

In general terms, the FINV mechanism is described in the amendments to the Tax Code adopted by the State Duma in July. The provisions will come into force in 2025, with important changes including an increase in corporate income tax from 20% to 25%.