The Russian President signed amendments to the Federal Tax Code last week aimed at fostering the development of innovation across the nation.
The new legislation accounts for a revised concept of R&D expenditure in respect to the creation of new products, works and services or towards the improvement of existing products as well as for the creation or improvement of applied technology, production and management methods.
An exhaustive list of R&D expenditure that may be fully deducted for profit tax purposes has been published, including:
- Amortization and depreciation of fixed and intangible R&D assets;
- Employees payroll directed towards R&D;
- Material expenditure directly relating to R&D;
- Payment for R&D contracts.
Other expenses directly connected with R&D may be deducted to the tune of 75% of the payroll costs for employees involved in R&D.
The revised law also stipulates that budget reserves may be set up for future or expected R&D, but only for a two-year period and under the following conditions:
- The amount allocated to the reserve is to be entered as an expense;
- The amount of the reserve not used within the set period is to be re-entered as non-operating income.
Finally, the new legislation proposes a three year property tax exemption for :
- Newly-built objects with high energy efficiency according to a list of such assets to be adopted by the Russian Government;
- Newly-built objects having a high energy efficiency class where the definition of an energy efficiency class is obligatory for the relevant objects (this condition will primarily concerne household devices and the residential building sector).
The law will enter into force as from 1 January 2012.
This article made use of materials from CMS Russia’s monthly legal digest
