Medvedev Signals Abolition Of CGT On Long Term Foreign Investment

by Tatiana Smolenskaya, Tax-News.com, Moscow

22 June 2010

In his televised address at the opening ceremony of the annual St. Petersburg Economic Forum, Russia's President Dmitry Medvedev announced that the capital gains tax on long-term direct investment will be completely abolished in Russia in 2011.

"Investment activity is one of the key factors for the successful modernization of our economy," Medvedev said. "Russia needs a real investment boom." Medvedev also said that extra tax preferences to stimulate innovation would take effect next year and that he would "return to the question of general tax cuts for business companies in the coming years", if there was a sufficient recovery in the global and Russian economies.

Medvedev promised to reduce the state's grip on the economy with more competition and a fivefold cut in the number of state-controlled enterprises which were designated to be of strategic importance. His actions were designed to attract massive foreign investment and ward off stagnation in Russia's oil-and-gas dependent economy, which shrank by nearly 8% last year according to the Russian president.

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