President Vladimir Putin’s plans for digital businesses to help power Russia’s economic recovery from the coronavirus pandemic by giving Russia one of the lowest tax rates in the world for IT companies might not be what they seem, analysts told The Moscow Times.
In an address to the nation in June, Putin hailed the Russian IT sector’s “dynamism and rapid growth,” built on “powerful technological and human resources,” and commended digital firms for helping businesses, government and society get through the worst of the outbreak.
To capture this momentum and put Russia’s technology scene on an even steeper upwards trajectory, Putin announced he would be slashing taxes for IT firms from next year. Corporation tax will be cut from 20% to just 3%, and social security taxes will come down to 7.6%, compared to 30% in other sectors of the economy.
The new tax regime “is better than in the most attractive jurisdictions for IT businesses today, such as India and Ireland,” Putin said. “In fact, it will be one of the lowest tax rates in the world.”
However, one month after Putin’s announcement, and with the government’s draft law on this so-called “IT tax maneuver” now published, the tax cuts aren’t that simple.
Russia’s ‘IT tax maneuver’ could bring cash to the budget, not to IT companiesRead More
