Putin signed the law on the zeroing of VAT for shipyards

Russian President Vladimir Putin signed lawwhich introduces a zero VAT rate for those shipyards that will direct at least 20% of their revenue for their own development over the course of seven years.

This obligation will be secured by an investment agreement (must be concluded before December 31, 2024), which the company will sign with the Ministry of Finance (which developed the bill) and the Ministry of Industry and Trade. The initiative was approved by the State Duma and the Federation Council last week.

The investment agreement can be terminated unilaterally, the document says, but in this case, VAT will need to be paid at a rate of 20% for the entire calendar year in which it was terminated.

The law comes into force on July 1.

Now zero VAT applies to the maintenance of seagoing vessels, inland navigation vessels and mixed navigation vessels (“river-sea”) during the period of stay in ports, pilotage, as well as services for the classification and examination of ships.

How informed in February, Prime Minister Mikhail Mishustin, the zeroing of VAT will expand the opportunities for enterprises to invest. They will be able to invest more in long-term projects, as well as purchase advanced expensive equipment that is necessary to service modern high-tech ships and marine equipment, the prime minister explained then. The Ministry of Finance then told Vedomosti that ship repair enterprises, when concluding investment agreements, would be able to apply VAT tax deductions at the time the goods and services were accepted for accounting, and not after the customer accepted the work performed, which would save more money in the companies’ turnover.

As Vedomosti wrote earlier, the Ministry of Finance has summed up the preliminary results of the project to exempt catering organizations from paying VAT, launched in 2022, and is ready to replicate the positive experience to other sectors of the economy. First of all, in those sectors where there is a potential for whitewashing wages and the number of employees, provided that the balance of interests of the state and business is maintained.