Agenda includes measures to promote the Russian IT industry, draft federal laws and budget allocations
Excerpts from the transcript:
Mikhail Mishustin: Good afternoon, colleagues. Before we start discussing the items on the agenda of this Government meeting, I believe we must discuss the tasks that the President set for us at a meeting of the Council for Strategic Development and National Projects. All of the Government’s efforts should be aimed at improving people’s lives. We are guided by this priority in our fight against the spread of the coronavirus and in our efforts to overcome the economic challenges faced by our country. We will resolve this task by relying on the updated Constitution, which our citizens supported.
We will take the new benchmarks into account when adjusting the national projects’ key parameters. Since they have been extended until 2030, we will identify key growth points for the future as well. It is necessary to work through each area so our people can see a specific result and a return on the funds and the resources invested in a particular national project. This is the strategy and responsibility of the Government in general and the personal responsibility of each minister and department head.
In this regard, I would like to draw your attention to the level of discipline when executing the tasks at hand. Preparation periods are being extended all the time with regard to a large number of governmental and presidential by-laws. I drew your attention to this from the earliest days of our work, and now the State Duma deputies are also talking about it. The situation is gradually improving, but not fast enough. However, we were able to quickly come up with a legal framework for all the decisions to support individuals and businesses that have been made in recent months. It is necessary to improve the process so that preparation of these Government documents can go smoothly on a permanent basis. I’m hereby instructing my deputies to finalise all these by-laws within 60 days. I want the heads of the federal executive bodies to do the same with regard to their respective departmental acts. Mr Grigorenko, please take these matters under special control and report to me every week.
Let’s get on with the Government meeting agenda. Today, the Government will allocate over 2.6 billion roubles to provide subventions to the regions for extinguishing wildfires. This is a vital matter. It’s important to use every resource and opportunity to find the most effective way to overcome this challenge. I want Ms Abramchenko to keep this issue under her personal control and to report to me in detail on the measures to contain the fires at the deputy prime minister meeting on Monday.
We will improve our protection for barrowers who have taken out a loan but have so far been unable to repay it. Often, lending institutions transfer overdue debts to other loan collection institutions that call the debtors and threaten them and demand that they make good on the debt. The courts often have to protect borrowers from this pressure. We have come up with amendments to the Code of Administrative Offences which will improve the mechanism for protecting borrowers from such unethical practices.
If found using threats in their business practices, lenders will be fined anywhere from 50,000 to 500,000 roubles. Such cases may be considered by the Federal Bailiff Service to which we will transfer the authority to do this.
We continue to provide support to the industries affected by the coronavirus pandemic. Today, we will allocate 3 billion roubles to subsidise air carriers which will increase the number of subsidised transport routes and make it possible to offer regional passenger service at special rates, which means an additional 450,000 passengers or more can fly.
Pursuant to presidential instruction, the Government has come up with a draft law designed to support the print media and book publishers. We will amend the Tax Code which will enable them to write off up to 30 percent of the cost of a print run if it loses its marketable condition or becomes outdated. In this case, almost a third of defective or unsold books, magazines and newspapers can be assigned as an expense and deducted from the tax base. Now, this can only be done with regard to 10 percent of an unsold print run. We have repeatedly received this request from publishers and media editorial offices, and today we will support this initiative.
The President instructed the Government to develop a set of measures to promote the Russian IT industry and create easier conditions for the specialists in this economic sector. We have already started working on this. Today, we will review the amendments to the legislation that are required to carry out a tax adjustment in the IT sphere. First, starting next year, insurance premiums for participating companies will be almost cut in half to 7.6 percent. Second, the profit tax rate for them will be set at 3 percent as opposed to the current rate of 20 percent that everyone is paying. These preferences will be made available to businesses, 90 percent of whose revenue comes from the sale of software and development and implementation services. Russian design centres that design and develop electronic products, as well as software developers, including artificial intelligence, will also be eligible for this tax break.
This way we will have one of the world’s lowest rates, a fact that opens up tremendous opportunities for businesses and professionals. Developing projects in Russia will be a more lucrative proposition than doing so abroad. We will create a truly favourable environment for IT companies and promising startups.
We will not limit ourselves to the tax support. We will continue to encourage the dynamic development of the industry and to support Russian companies.
I want Mr Siluanov to report on this draft law.
Indeed, the tax terms proposed by the draft law will be among the world’s lowest and will ensure our companies’ competitiveness in the international market.
The draft law creates a favourable environment for quick development of the IT industry in our country and creates resources for investing in new projects which will create new jobs. Businesses will be interested in working transparently, and digital development costs for the end consumers will go down.
Economic activity is increasingly moving online, and we hope that the IT industry will become the driver of economic growth.
Expanding this sector will help reduce our economy’s dependence on oil and energy.
Mr Mishustin, you have already noted that we suggest implementing a tax subsidy that includes both a lower profit tax rate and lower insurance premiums. Moreover, we are reducing insurance premiums to 7.6 percent indefinitely. If until recently, we had a rate of 14 percent, which was set for a specific period, we are now creating guarantees for businesses that concern low tax rates. Reduced rates can be used by taxpayers with state registration, and those who generate at least 90 percent of their revenue from selling software programmes. A similar reduction in profit tax and insurance premiums is envisaged for the companies engaging in designing and developing electronic component base products, which is also important.
Revising the procedure for exempting the IT industry from the value added tax is another tax adjustment element. We propose a tax exemption for the exercise of exclusive rights to software programmes included in the Unified Register of Programmes for Electronic Computers and Databases. This will improve the target-oriented nature of this benefit.
These proposals concerned measures to develop the IT industry.
Another change in this draft law is as follows: in accordance with your instructions, Mr Mishustin, we propose supplementing the draft law with a rule to the effect that individuals residing in the Russian Federation in 2020 for 90 to 182 days inclusive shall be entitled to recognise themselves as Russian tax residents in 2020 based on an application filed with the tax authorities. It can be written in any form and filed along with an individual income tax return. This will provide an opportunity to attract to our country people who want to work here, develop their businesses and become local tax residents. We want you to support these tax proposals.