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Russian Prime Minister Vladimir Putin has announced that a series of business tax reforms will take place next year to help the corporate sector negotiate the deteriorating economic climate.
Putin told the national convention of the United Russia party on Thursday that corporate tax will be cut by 4% to 20% from January 1, 2009, and that companies will pay tax on their actual profits as opposed to the "paper profits" displayed in company accounts. Regions will be also be able to reduce their share of the total by up to 10%, currently set at 4%, therefore allowing a lowest possible overall rate of 10%. These measures are expected to save companies about RUB400bn (USD15bn).
Small businesses can also expect a substantial tax cut next year, Putin announced, and the rate of profit tax for small firms is to be lowered to 5% from 15%
Additional reforms proposed by Putin designed to ease the tax burden on business include changes to value-added tax rules that will accelerate refunds to businesses and simplify the advance VAT payment process. Also, the investment depreciation allowance will be increased to 30% from 10% of the cost of fixed assets. These changes are also due to take effect from January 1.
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