Issue #3, March 2017 | Deloitte CIS | Tax has been added to your bookmarks.
Global Investment and Innovation Incentives news
Issue #3 | March 2017
- Regional Tax Incentives
- Court practice
- Special investment contracts and regional investment projects
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22 March 2017
Regions continue to amend laws governing applicability of tax incentives
Tyumen Region has reduced the share of corporate profit tax payable to the regional budget for entities engaged in ore mining from horizontal wells using multiphase and cluster hydraulic fracturing technologies with estimated capacity of at least 300,000 tonnes per year; the benefit is available in 2017 and there are plans to keep it in 2018.
The Republic of Altai has amended the regional laws that regulate awarding the status of an investment project. Now an investment agreement may only be signed after the republican government issues a directive assigning the regional status to the investment project, which slows the signing process (earlier there was no need to wait for such a directive to be issued). Also, an investment project can now be stripped of its status by a decision of the Head of the Republic of Altai, if the status was assigned to the project without completing a tendering process and signing an investment agreement.
A draft law has been introduced to the State Council of the Republic of Tatarstan, extending the corporate profit tax incentive as per Item 25, Article 381 of the Tax Code with respect to movable property beyond 1 January 2018. Tatarstan is the first region to introduce to its legislature a draft law, providing for this type of incentive.
Regional tax incentives
30 March 2017
Court practice: application of tax incentives
Case No. А65-30815/2016: A first instance court disallowed the application of a corporate property tax incentive for highly energy-efficient facilities with respect to reconstructed buildings, where one of the buildings was a cultural heritage site. Denying the incentive, the court cited that (i) energy efficiency requirements do not apply to such properties; (ii) class B (high) is not sufficient to qualify for the incentive.
Case No. А57-16659/2016: A first instance court disallowed the application of a regional corporate property tax incentive for entities engaged in the production and processing of agricultural products from own produce. The court established that the taxpayer processed the raw material (milk) it purchased from third parties rather than produced internally, i.e. the taxpayer did not meet the incentive’s fundamental condition.
Case No. А26-11202/2015: The Russian Supreme Court denied the case escalation to the Supreme Court’s Panel on Economic Disputes, noting that the Company had inappropriately applied the corporate property tax incentive for highly energy-efficient facilities with respect to flats in a block of flats, failing to provide the required documentary proof of the high energy efficiency.
23 March 2017
Perm Region creates a new Territory of Advanced Social and Economic Growth (TASEG)
Perm Region has established a new TASEG “Chusovoy”. Among the requirements for TASEG residents are the following: within a year of receiving the resident’s status, investors must invest at least five million rubles and create at least 20 new permanent jobs.
14 March 2017
Kaluga Region approves new terms of granting subsidies for investment projects
Kaluga Region has approved the new terms and procedure for subsidising the costs of investment project implementation. In particular, the procedure for the calculation of the subsidy amount depends on the type of activity performed by the recipient as part of the investment project. Previously, the subsidised amount was equal to the corporate profit tax paid to the regional budget in a fiscal year, regardless of the type of activity. That process was in breach of the federal budgetary legislation.
1 March 2017
Krasnoyarsk Region approves a new procedure to subsidise some of the costs incurred in creating agro-industrial facilities
Krasnoyarsk Region has approved a selection procedure to identify the investment projects eligible for subsidies to cover some of the direct costs incurred when setting up facilities for the storage, processing and reclamation of agricultural produce and farm animal waste. The selection criteria include the share of equity in the structure of financing, stability of tax base growth, payback period of the investment project, and the number of jobs created. No cap is set on the subsidy size.
23 March 2017
Legislation governing special investment contracts amended
Sverdlovsk Region has defined a procedure to monitor investors’ compliance with their obligations under special investment contracts (SPIC), signed with the region. Under this procedure, in the end of the reporting period and the term of the SPIC, investors must provide reports on the completion of their respective obligations and the results of project implementation. Furthermore, the procedure defines a list of indicators to assess investors’ performance and achievement of the SPIC’s goals by. Such indicators include the amount of investment, production volume, number of jobs created, taxes paid, tax incentives used, etc.