In late June, Russian President Vladimir Putin announced unprecedented support measures for the IT industry: it permanently reduces the rate of insurance premiums from 14% to 7.6% and profit tax from 20% to 3%. Such rates could make Russia one of the most profitable countries for the development of software (SW), if not a fly in the ointment. To compensate for the budget losses, the price of the software, with a few exceptions, again is now zero VAT. For many companies, this at least eliminates the benefits, not to mention the rise in price of software for consumers. As a result, now the business hopes to persuade the government to return the VAT for foreign players.As it became known “Kommersant”, July 9, representatives of IT-business needs to meet in the “Innopolis” with Prime Minister Mikhail Mishustin, to discuss the final parameters of the tax maneuver in the industry. Depending on conditions it can become for her salvation, and murderous.At stake serious money. In recent years, the industry of software development as one of the key parts of the IT market in Russia is growing steadily at 10-15% per year. “2019 for the software industry was relaxed and positive, sales growth and software development services amounted to about 20%, whereas foreign sales rose 15%, to about $11 billion,”— said the President of Association “RUSSOFT” Valentin Makarov.But in mid-February amid falling oil prices have software companies problems began, and in March they added the delays of payments caused by the pandemic. According to experts, to delay payments for work performed has faced more than 80% of companies and a fall in the turnover of IT companies was more than 50%.The fall of the Russian IT-market on the basis of 2020 may exceed 30% in dollar terms, predicted in IDC (see Kommersant dated 29 April). Necessary to restore the amount of state funding IT companies was estimated at an average 24.3% of their annual turnover, that is 242 billion rubles, if you focus on the data about the total revenue of enterprises in the industry by 2018 (no more recent data), calculated in the “RUSSOFT”.In the end, 23 June, Vladimir Putin announced the “tax maneuver” for the industry indefinitely will reduce the rate of insurance premiums from the current 14% to 7.6% and profit tax from 20% to 3%.But, as wrote “Kommersant” on 25 June, to compensate losses of the budget from support of IT-industry proposed the cancellation of the January 2021 zero VAT on the sale of exclusive rights to software and rights to use them under the license agreements.Only in 2021 that should bring in a budget of 42.5 billion rubles IT-companies, which are included in the national registry (there are several major suppliers of the state), to compensate for the introduction of VAT it is proposed to provide subsidies.For whom crying lgoty a result of the tax maneuver will not be beneficial in the IT industry, and budget, are sure to love.Yong Spirit representative (developer AT VideoMost). The decrease in the rate of social contributions and income tax with the introduction of VAT for the manufacturers is not a preference for the industry, and the growth of the tax burden, sure there. Have software companies will instantly appear obligation for payment of VAT and cash gaps, despite the fact that the economic situation is so severe, the grants are not guaranteed, and the design and administration becomes more complex and long, added to the company, stating that the abolition of the exemptions from VAT for many, significantly complicate or make impossible the conduct of business.Most of the maneuver will suffer a small business with low profitability and akreditovannye companies, whereas large players have enough margin, they will survive and adapt, says the Chairman of the Board of Directors of “SearchInform” Lev Matveev.In the short term really wins the budget, as it increases the amount of fees from legitimate software developers, but in the long run loses and the budget too, as some companies will go bankrupt, and some will go in the gray zone or another jurisdiction, says commercial Director of Promt Nikita Shablikov. The company, he explains, build budgets and investment plans for several years ahead based on current conditions, and in the adoption of such drastic measures necessary preliminary discussions with industry representatives and at least a significant delay.In addition, the introduction of subsidies leads to an inevitable decline in the attractiveness of special economic zones (SEZ) Innopolis and SKOLKOVO, adds Leo Matveev. Now the main bonus of entering in them the tax incentives for residents. Reduced insurance premiums and income tax for all IT companies block the tax concessions the SEZ, it is possible for the resident will take “add bonuses” to not complain then, that did not work, the domestic Silicon valley, warns Mr. Matveev.Finally, the abolition of VAT exemptions change the price structure that will have an impact on consumers, said General Director of Reksoft Alexander Yegorov. Banks, for instance, is a direct tax and they will not be able to receive a tax deduction, the consumers of other sectors will increase VAT, he points out. As for the sellers of Internet services and companies working in the field of software development for ordering (which is about 75% of the companies operating in the domestic market development), and so they pay VAT, so for them, the abolition of benefits will not be affected.Will tax havens”Tax havens” in theory, it can really help to attract global business. Pronounced beneficiaries of tax cuts will become subsidiaries of international companies operating in Russia and accreditaand��e as a Russian IT-companies, and therefore subject to tax breaks, I’m sure the CEO of TAD Development Taras Fedorov. For such companies opening R&D units in Russia and now is the best step, and with a reduction in “payroll taxes” and income tax will become even more attractive, he said.Benefit from the introduced measures and those Russian companies that export IT services or products abroad, says Mr. Fedorov. In case of cancellation of the VAT exemption of exporting companies will be able to start to deduct input tax, which allows them virtually to ignore this measure, he says. The bias of the support package towards the export market creates the impression that IT is seen as the new oil, but without comprehensive changes to the rules of doing business in the country measures don’t work as expected, he said.For Russian exporters of soft the effect will be positive, because if there are benefits of input VAT on costs on costs, and the absence of incentives for exports to apply the zero rate and input VAT will be deducted from the budget, joint partner of tax services to companies in the field of communications, information technology and media at PwC Russia Natalia Vozianov.From the point of view of fiscal calculation can indeed seem that tax reform favors exporters, but the problem is that all our major companies sell abroad through their commercial structures registered in Switzerland, UK, Cyprus and so on, indicates the managing partner of Leta Capital Alexander Chachava. And it is not in the rates: taxes in some countries already higher than in Russia, he said.An important feature of IT-business at the global level, according to Alexander Chachava, that it very often do not build for profit, but primarily for the growth of capitalization, that is, to sell to a strategic investor or to disperse the capitalization to the public market. In the Russian conditions on the growth of capitalization it is not, the investment climate is weak, shareholder rights are protected poorly, he said. The thing is that from Russia it is inconvenient to export the software for many reasons, including the additional bureaucracy and the fact that customers from Europe and USA “don’t like to pay the Russian company”.A tax reduction, these problems can not be solved, for the return of the exporters in the Russian jurisdiction requires a whole range of measures, concludes Mr. Chachava. However, the reduction of social contributions in and of itself will be registered abroad companies a great gift, as their employees are in Russia, he points out, in the end the company will have more resources to spend, including to promote their products on the global market.Where it is not our propgave the meeting of industry representatives with Mikhail Mishustin, according to sources, “b”, to discuss the possibility of abolishing the VAT exemption only for foreign software. In this embodiment, the benefit may be stored, for example, all Russian legal entities which are accredited by the Ministry of communications, have the national registry, distribute it throughout the territory of the Russian Federation and for all legal entities, not complying with the American sanctions, and also have in Russia legal staff for modification and development, said a source.If the foreign company will comply with all these conditions, lokalizatsii in Russia, it will have the right to retain the VAT exemption, which would correspond to the exchange rate on the invitation of foreign capital and business in the IT sector by creating favorable jurisdiction, explained the interlocutor of Kommersant.However not the fact that many foreign companies will be able or want to work in Russia without regard to sanctions. In this case, further strengthening of competitive position for local developers at least doubtful from the point of view of international agreements, said the Deputy Chairman of the Committee of the Russian Union of Industrialists and entrepreneurs on intellectual property and the creative industries Anatoly Semenov.In the case of the introduction of VAT for foreign companies will be violated such principles of the world trade organization, as the principle of non-discrimination and the principle of national treatment, he said. The first of them recorded in a number of acts in the Russian legislation is to provide equal conditions for domestic and foreign companies, while the second provides that in applying the measures of internal taxation “internal regulations should not be applied to imported or domestic products so as to afford protection to domestic production”, he explains.This position is to be expected and fits in the General trend “to be nice by force, time for love failed,” admits Mr. Semenov. However, he adds, it’s hard to call the creation of a favourable jurisdiction, more or less favourable domestic offshore remain only Kaliningrad and Vladivostok, where, “in fact, abolished the Russian law for redomiciliation and incorporation”. In General, says the expert, this forced localization can now be called a General trend of public administration in Russia.Yulia Stepanova
