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Russia Grants Tax Breaks To SMEs

by Tatiana Smolenska, Tax-News.com, Moscow

24 January 2014


The Russian government has announced a raft of stimulus measures for small and medium enterprises (SMEs), including a two-year tax exemption.

The tax exemption will apply to SMEs engaged in manufacturing, services and research. New companies operating in Russia's Far East and Eastern Siberia will be given a five-year tax exemption.

The measures were announced by Russian Prime Minister Dmitry Medvedev during the Gaidar Economic Forum, which took place in Moscow from January 15 to 17, 2014.

The stimulus package, which also includes government contracts and subsidies worth around USD630m, is expected to come into effect before the end of this year. It is hoped that the package will encourage growth in the areas of manufacturing, services and research, which are important to the Russian economy.

Foreign investors will also be eligible to take advantage of the incentives, as long as they meet certain conditions. Russian law treats small firms established by foreign entrepreneurs the same as Russian SMEs. However, companies which are set up by foreign firms will need to forge partnerships with domestic companies (with the foreign firm taking a 25 percent stake at most) in order to enjoy the same rights as Russian firms.

TAGS: Russia | tax | investment | tax incentives | law | entrepreneurs | manufacturing | small and medium-sized enterprises (SME) | tax breaks | services

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