Cos with projects to produce ethane, LPG to remain participants of Russian regional investment projects under bill
MOSCOW. July 17 (Interfax) - Russia's Finance Ministry has proposed amendments to the Tax Code under which organizations implementing investment projects to produce ethane and liquefied petroleum gas (LPG), as well as liquid steel will remain participants of regional investment projects (RIP).
The changes were presented at a meeting of the State Duma Budget Committee on Friday for the second reading of bill No. 369931-8.
Under current law, an RIP cannot involve production of excise goods, with the exception of automobiles and motorcycles. This provision was introduced in 2013 along with the main law. However, ethane, LPG became subject to excises as of October 2020 and liquid steel became an excise good as of January 1, 2022.
Therefore, organizations with investment projects to produce ethane, LPG and liquid steel are not recognized as participants of RIPs and do not have the right to apply the reduced corporate profit tax rates for which this category of taxpayer is eligible. The Finance Ministry warned about this in a letter dated March 16, 2021.
"Requirements and restrictions for RIP participants are clarified here as regards production of excise goods, those that we made such excises goods, such as liquefied petroleum gas and gas condensate, which we made subject to excises exclusively for the purposes of stimulus so as to set excises for them, so that the regional investment project regime can be used in regard to these taxpayers and these projects," Deputy Finance Minister Alexei Sazanov said at the committee meeting.
The changes are being made to Article 25.8 of the Tax Code. Under the new version, the RIP regime cannot be used in production of excise goods, with the exception of cars, motorcycles, liquid steel, ethane, LPG, and petroleum feedstock consisting of one component - stable gas condensate and obtained as part of the same process for production of ethane and LPG.
"Do I understand correctly that taxpayers who previously implemented RIPs in regard to products that became subject to excises have the right to remain participants of RIPs?" committee chairman Andrei Makarov asked. "Yes," Sazanov replied.
It is also proposed that participants of RIPs registered prior to January 1, 2019 be allowed to count as capital investments fixed assets that were financed prior to inclusion in the registry but put into operation after inclusion.
