The plans put forward by the Economy Ministry would see taxes on the sale of securities traded on an organized market cut and that on shares of mutual funds annulled in certain circumstances. The ministry also proposed moves to relax the qualification requirements for the zero tax rate on dividends by lowering the ownership threshold, possibly to 25%, from 50%.

The proposals came after Russian President Dmitry Medvedev in July signed into law a provision which, the Kremlin hopes, will ease the tax situation of small businesses in Russia, boost social welfare, and reduce the tax burden on the oil sector.

However, while these measures have been mostly welcomed, Russia’s business sector has long been complaining that deeper tax reforms are needed to unleash the country’s entrepreneurial potential and put the economy on a solid basis.

At a tax forum last Wednesday, the Russian Chamber of Commerce urged the government to put in place reforms to encourage more research and development by the private sector. At present, only 8% of Russian companies are currently engaged in R&D, and 80% of those are state-owned. This compares badly with other developed countries.

The Chamber also wants those who carry out research and conform to certain guidelines to be given a 10-year respite from VAT payments.