Russia's Digital Ministry to propose extending zero profit tax for IT cos
MOSCOW. Oct 20 (Interfax) - Russia's Digital Development Ministry intends to lobby for the extension of the zero profit tax rate for information technology companies and producers of software and hardware systems and will discuss this with the Finance Ministry, Digital Development Minister Maksut Shadayev said.
The zero profit tax rate applies to IT companies and producers of software and hardware systems included in the registry of Russian software and is currently set to expire at the end of 2024. The tax rate is supposed to go up to 3% in 2025.
"There is no final decision. We will discuss this with the Finance Ministry. Naturally, we will petition for an extension, but then it will be as the government decides," Shadayev said at a meeting of the State Duma Budget Committee on Thursday.
He did not specify the period for which his ministry will propose to extend the tax break. However, business daily Vedomosti reported in March that the Digital Development Ministry proposed to make the zero profit tax rate for IT companies indefinite. Deputy Minister Alexander Shoitov sent a letter with this proposal to the government's representative in the Duma, Alexander Sinenko, the paper said.
Shadayev said the tax break, which was introduced in 2022, was crucial and it has worked.
"In such difficult conditions, beginning in 2022, companies were able to invest in developing their own production. New large factories are opening [in Russia] to produce heavy computer equipment, servers, data storage systems, base stations. We had four large facilities open last year and this year. This is the result of us being able to grant this tax break," Shadayev said.
"We're seeing a real effect. The amount of sales of our own products, shipments of products made by Russian companies, services provided by our own efforts grew by more than 20% last year. Now, for the first time, Russian producers are supplying more than 50% of server hardware, the very hardware we need for digital platforms, data processing centers to work. In general, very good results," Shadayev said.
