Tax incentives can significantly reduce the tax burden on entrepreneurs and investors, enhance investment returns, and facilitate effective tax planning. In Russia, a range of incentives is available that can benefit both small and medium-sized businesses, as well as individual investors. Let’s examine the main tax incentives and how to apply them, including special benefits for Skolkovo residents.
1. Tax Incentives for Small and Medium-Sized Businesses
Small and medium-sized enterprises (SMEs) have access to various forms of tax incentives that can lower their tax liabilities:
- Simplified Tax System (STS). This is one of the most popular tax regimes for small businesses. STS offers two tax rates: 6% on revenue or 15% on the difference between income and expenses. Entrepreneurs can choose the most suitable option based on their business structure. Additionally, reduced rates are available for certain types of activities.
- Patent Taxation System (PTS). This is available for individual entrepreneurs (IE) engaged in specific types of activities. The cost of the patent depends on the region and type of activity, allowing entrepreneurs to estimate their tax obligations for the entire year in advance.
- Insurance premium discounts. Certain categories of businesses, such as IT companies or those in agriculture, benefit from reduced insurance premium rates.
- Tax holidays. In several regions, entrepreneurs registering as individual entrepreneurs for the first time may take advantage of tax holidays, enabling them to defer tax payments for the first two years under certain types of activities.
2. Tax Incentives for Investors in the Stock Market
Investors in the stock market can also benefit from a range of tax incentives that help minimize tax burdens and enhance investment returns:
- Individual Investment Accounts (IIA). This is one of the most popular tools for private investors in Russia. It allows for two types of tax deductions:
- Type A - a deduction for contributions up to 400,000 rubles per year, enabling a tax refund of up to 52,000 rubles. This is suitable for those paying personal income tax (PIT) at the rate of 13%.
- Type B - exemption from taxation on income derived from securities transactions when the IIA is closed. This option is suitable for investors planning significant investment returns.
- Long-term capital gains exemption on share ownership. If an investor holds shares for over three years, gains from their sale may be exempt from taxation, provided the purchase value of assets does not exceed 3 million rubles per year.
- Deferral of taxation on dividends. Some companies offer shareholders the option to reinvest dividends into new shares. In this case, the tax on dividends may be deferred until the shares are sold.
3. Tax Incentives for IT Companies and Innovative Projects
Companies engaged in information technology and innovative projects can take advantage of special tax incentives:
- Reduced corporate income tax rates. For IT companies meeting certain criteria (such as having accreditation from the Ministry of Digital Development), the corporate income tax rate can be reduced to 3%. There are also exemptions for VAT and property tax.
- Discounted insurance premiums. For accredited IT companies, the insurance premium rate is 7.6% instead of the standard 30%.
- Incentives for residents of technoparks and special economic zones. Companies operating in such zones can expect exemptions from property tax and land tax, as well as reduced corporate income tax rates.
4. Tax Incentives for Skolkovo Residents
Residents of the Skolkovo Innovation Center enjoy significant tax benefits that help lower operational costs and stimulate innovative activities:
- Exemption from corporate income tax. For the first ten years, Skolkovo residents are exempt from paying corporate income tax, allowing companies to reinvest funds into business development.
- Exemption from VAT. Resident companies do not have to pay value-added tax on the sale of products, which reduces the cost of goods and services.
- Reduced insurance premiums. For Skolkovo residents, the insurance premium rate is set at 14% instead of the standard 30%, lowering labor costs.
- Exemption from property tax and land tax. This exemption allows companies to reduce expenses related to property and land ownership.
The company Open Oil Market is a Skolkovo resident and fully utilizes the aforementioned benefits. This helps us optimize taxation, reduce costs, and allocate more resources for the development of our wholesale procurement platform for petroleum products.
5. Tax Incentives for Agriculture and Socially Significant Industries
Companies involved in agriculture and socially significant industries can also take advantage of tax incentives:
- Unified Agricultural Tax (UAT). For companies engaged in agricultural production, a special tax regime provides simplified taxation at a rate of 6%.
- VAT exemptions. Certain types of agricultural products benefit from a zero VAT rate, significantly reducing the tax burden.
- Social enterprises. Organizations working in the social sector may qualify for tax incentives, including exemptions from corporate income tax and reduced insurance premium rates.
6. Property and Land Tax Incentives
Entrepreneurs and companies owning real estate or land have access to the following incentives:
- Property tax deductions. Companies engaged in manufacturing activities can avail of deductions for property tax if the real estate is used for primary operations.
- Incentives for small businesses. Some regions offer benefits for the taxation of real estate owned by small businesses.
- Reduced land tax rates. Lower rates may be established for certain categories of entrepreneurs (e.g., farmers) regarding land tax.
7. Tax Incentives for Foreign Investors
Russia provides special tax conditions for foreign investors, making the country attractive for international capital:
- Preferential conditions for investment projects. Foreign companies participating in significant investment projects may expect tax incentives, including exemption from corporate income tax and VAT.
- Double tax treaties. Russia has agreements with over 80 countries, allowing foreign investors to avoid double taxation on their income.
- Investment agreements with the government. Such agreements may provide for individual tax incentives for major investors.
Tax incentives are an effective way to reduce the tax burden and enhance the profitability of business or investments. In Russia, numerous incentives exist for various categories of entrepreneurs and investors. For example, Open Oil Market, as a Skolkovo resident, benefits from significant advantages, including exemption from corporate income tax and reduced insurance premiums, enabling efficient business development and competition in the market.
