The Ministry of Industry and Trade proposed introducing tax incentives for the engineering industry

The Ministry of Industry and Trade proposed introducing tax benefits for the engineering industry, similar to the IT industry. This is stated in the draft concept for the development of engineering and industrial design in Russia, which was prepared by the Ministry of Industry and Trade and signed by the First Deputy Minister of Industry and Trade Vasily Osmakov, writes RBC.

Among the proposals are a temporary zeroing of income tax, a reduction in insurance premium rates, exemption of a number of services from VAT, financial preferences, etc. The Ministry of Industry and Trade noted that this concept is only at the formation stage.

Osmakov explained that this program will ensure “accelerated technological development and a high level of localization of industrial production,” and will also provide an opportunity to “eliminate and minimize the risks of further development of barriers limiting the development of the industry.”

According to the text of the document, a company will be able to receive tax benefits if it has existed for at least three years and has a profile OKVED, tax residency in Russia, a share of income from engineering activities of more than 30%, and also if it has annual revenue of at least 10 million rubles. during the previous three years. In addition, the company will have to provide consent to disclose tax secrets. If these conditions are met, the company will be added to a special register of engineering organizations and industrial design firms. Once every two years, the right to be in this register will need to be confirmed.

The tax maneuver for IT companies whose developments are included in the register of domestic software was approved by the president in the summer of 2020 and has been in effect since 2021. Initially, for companies in an indefinite mode there was a preferential rate of 3% for income tax and 7.6% for payroll tax. In July 2022, the income tax rate was reset to zero, but only until the end of 2024. The condition under which a company can take advantage of the benefits is that it must receive 70% of its revenue from the development of software and hardware and software systems, online advertising or online subscriptions.