Capital was left with no choice – Newspaper Kommersant No. 45 (7490) of 03/17/2023
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Yesterday’s RUIE congress showed that the authorities de facto refused to provide business with alternatives – to invest “surplus profits” in the economy or replenish the budget with them. When calculating the excess income tax at a rate of about 5%, capital investments will not be taken into account – an exception will be made only for agreements on the protection and encouragement of capital investments (SZPK), on which the White House has been working in recent years, Kommersant was told in the Ministry of Finance. The funds received from the taxation of excess profits can be invested in support of lending to priority investment projects. The need for a statistical increase in capital investments after the investment boom in 2022 – largely due to the early completion of projects that have been started – still forces the government to look for new mechanisms to stimulate investment activity: in particular, they are ready to discuss the easing of capital restrictions for foreign companies cooperating with them.
The key topic of yesterday’s RSPP congress was the construction of windfall tax – an additional contribution of business to the budget from “surplus profits”, which can become permanent. The budget in 2023, we recall, expects to receive about 300 billion rubles, however, “business proposals to increase the volume will be welcome,” said Finance Minister Anton Siluanov.
The difference in profits of companies in 2021-2022 compared to 2018-2019 will fall under the additional tax. According to Anton Siluanov, if in general the net income tax balance for 2018-2019 was about 16 trillion rubles, then in 2021 – 34 trillion rubles, for 2022 (reporting is not yet available) it can reach 26 trillion rubles . De facto, about 6 trillion rubles are now considered “excessive” – according to the Ministry of Finance, 0.1% of companies with excess profits of more than 1 billion rubles will be subject to taxation. (exception – SMEs, oil and gas and coal industries), which at a rate of about 5% will allow to collect the necessary 300 billion rubles. The law on additional fees will come into force in 2024, but the Ministry of Finance is waiting for receipts already in 2023. “We will lay down mechanisms that encourage entrepreneurs to pay this year, there will be the possibility of paying next year, but it will be less financially profitable,” Mr. Siluanov said.
The government’s scheme, which takes into account the pre-tax revenues of companies, turned out to be not linked to their investment activity, which contradicts his own ideas about giving businesses a choice – to invest or pay extra “extra” to the budget.
“It is very difficult to consider what kind of investments: social investments should be taken into account or not? Significantly complicates the administration process, this is the first. Secondly, the rate should be different, ”Mr. Siluanov explained to Kommersant (if investments were excluded from the windfall tax base, the rate would be significantly higher).
The only protection for companies’ super-profits will be agreements on the protection and promotion of capital investments – the Ministry of Finance explained to Kommersant that new taxes will not be applied to projects under the agreements. “From the tax base of the company, it will be necessary to isolate the tax base for the SZPK project, and the windfall income tax will not be applied to it. With regard to the rest of the tax base (not related to the SZPK), the tax will be applied,” the ministry added. Such a design may spur companies’ interest in the mechanism: according to experts, it has not yet been fully operational (see “Kommersant” dated March 13). From the end of 2022 to the beginning of March 2023, seven agreements for 562 billion rubles were signed under the new rules, six on an accelerated basis in December 2022 due to the risks of “delay”.
Investment activity, we note, became the second most important topic of the RSPP congress.
Understanding that, statistically, the current growth in capital investments is provided by the completion of what has been started and a decline in investments is likely in the coming years against the backdrop of a high base, problems with the import of equipment and a delay in import substitution, the authorities, however, are counting on the activity of Russian companies in the absence of alternatives – and so far they are ready to discuss indulgences only for foreign investors. First Deputy Prime Minister Andrei Belousov announced plans to ease capital restrictions for non-residents (both from “friendly” countries and from “unfriendly ones”) if they entered the Russian market after the start of the Russian military operation in Ukraine and the imposition of sanctions. The official did not give details – they will be discussed at a government meeting with the participation of Vladimir Putin on March 22.
According to Anton Siluanov, we are talking about the ability of foreigners to withdraw invested money from the Russian Federation: including concessions may affect the work of type C accounts – now the funds of foreign companies in rubles are blocked there (mainly dividends from investments in Russian companies), which can only be sent for the payment of taxes or the purchase of OFZ. Now the government commission can individually approve their conversion or the payment of dividends to ensure the continued operation of companies in the Russian Federation, but such a mechanism is not transparent and limits them. At the congress, the general director of the Biesse group (a subsidiary of the Italian machine tool group Biesse) Matteo Valic proposed making dividend payments more predictable. The President instructed the government to work out such a mechanism, provided that part of the funds is invested in business development within Russia.
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