Doing Business in Russia
Doing Business in Russia
Venture Corporation allocates funds to
support venture capital based projects.
Russia additionally provides an
extensive list of tax concessions
to companies with a high degree
of intellectual capital. For example,
IT companies have had their social
security contributions reduced from
30 percent to 14 percent until 2017,
while their intangible assets are now
amortised over two years instead of
ten. A zero-percent profit tax rate has
been introduced on income from the
disposal of shares in Russian hi-tech
companies (providing certain conditions
are met), and legislation is being
developed to improve the accounting of
R&D expenses for profits tax purposes.
Significant tax and customs
concessions are also being granted to
residents of special economic zones
(set up to promote innovation and
technological development). These
concessions range from decreases in
major taxes (profits tax/social security
contributions) through to full tax
exemptions (property tax, land tax and
transportation tax).
Some of the measures adopted for
those participating in the flagship
Russian 'Skolkovo' project are
internationally unique. The purpose of
Skolkovo is to create the conditions
necessary for successful innovation
at every stage of development,
including commercialisation of the end-
results. Skolkovo provides all of the
infrastructure needed to concentrate
intellectual capital and generate
innovative solutions in the priority
industries of nuclear technology, energy
efficiency, aerospace technology, IT and
pharmaceuticals.
Legislation provides VAT, profits tax
and property tax exemptions for
Skolkovo residents, along with a further
reduction in the rate of social security
contributions down to 14 percent for
a period of up to ten years. Customs
duties on imported equipment that
meet specific requirements can also
be reimbursed, while simplified visa
procedures can be adopted to bring in
foreign specialists.
It was announced that Skolkovo's basic
infrastructure will soon be completed,
though companies that expressed
interest in participating in the project
before its completion have been
able to be enjoy all of the project's
benefits (including tax and customs
concessions) while being physically
located elsewhere. Legislation applied
these privileges up until 2014.
Many recognised global hi-tech
leaders, such as Intel, Cisco,
Microsoft, Siemens and Boeing,
have already signed memorandums
of understanding with the Skolkovo
Foundation (the project's managing
body). Some of them have announced
significant investments to be made
in the Skolkovo project (amounting to
billions of US dollars).
This flagship project is currently still
at the implementation stage and the
business community is awaiting the
initial results.
If the Skolkovo project is successfully
combined with other state-supported
measures to encourage innovation,
Russia is very likely to have the
opportunity of taking its place among
those countries in the world which
have developed, innovation-based
economies. The key is to make the
most of this opportunity in a competent
and professional manner, so that
everyone, including Russia's citizens
and foreign partners, believe in the
concept of the innovation economy
and actively support implementation
of 'innovation-based' plans by the
government.
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Moscow
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