Ministry of Finance proposes to ease eligibility requirements for IT companies’ benefits

Ministry of Finance proposes to ease eligibility requirements for IT companies’ benefits

The proposal was agreed upon by the Digital Ministry and approved on May 23 by the Government Legislative Commission. Today, in order to receive benefits, IT companies must obtain at least 90 % of income from software and database development, be accredited as organizations carrying out IT activities and have at least seven employees.

The Ministry of Finance also proposed to include the money earned from selling computer program or database instances, transferring exclusive rights, allowing remote users to access the products via Internet connection, providing program and database development and modification services, and so forth, in the 70 % income.

As stated in the document, the proposal was prepared in accordance with the priority action plan for the development of the Russian economy amid sanctions. The extension of benefits granted to IT companies will reduce federal revenues by ₽20.3 billion, with ₽13 billion coming from the income tax and ₽7.3, from insurance premiums.

A representative of the Digital Ministry told the media that the department had been preparing amendments to the Russian Tax Code together with the Ministry of Finance. In April, the Ministry of Finance submitted the bill to the Government. The media asked the Ministry of Finance and the Government for comment on the amendments.

Vasily Golovanov, head of the “Technologies for Trust” company’s department responsible for providing tax services to enterprises engaged in communications, information technology and media, referred to the ministry’s proposal as a “long-awaited measure.” Lowering the threshold of income earned through IT activities will give companies the opportunity not to limit themselves by carrying out the primary activities only and to operate in adjacent areas as well. For example, gave developers will be able to earn revenue through in-game advertising. As for lifting the restriction on the number of employees, it will allow small companies to receive benefits too.