PRESS: Putin orders Russian govt to discuss investment benefits

MOSCOW, Jul 20 (PRIME) -- Russian President Vladimir Putin ordered the government to see whether it can introduce a tax benefit on capital expenditures for upgrades, business daily Vedomosti reported Monday citing federal officials.

Amendments for an investment benefit for new companies is already in parliament and cancels the federal, 2% component of the profit tax. Regions will have the right to decrease their component to 10% from 20%. The Finance Ministry is against the idea, a federal government official told the paper.

Regions may grant the benefit already in 2016, and later it may become a federal benefit.

Another ministry official said that if the benefit is imposed, the federal budget will lose twice -- the benefit will decrease the federal component of the profit tax and the budget will have to cover regions’ losses.

In this case, the government may have to increase other taxes even despite Putin’s moratorium on raising taxes, an Economic Development Ministry official told Vedomosti.

The investment benefit was in force from the 1990s until 2002, when the government abolished it and decreased the profit tax first to 24% from 35%, and then to 20%.

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