Agenda: Legislative motions to enhance economic stability amid tougher sanctions
Mikhail Mishustin’s opening remarks:
Government meeting
Good afternoon, colleagues,
Last week, acting on the President’s instruction, the Government promptly drafted and approved decisions to mitigate the impact of sanctions by unfriendly countries to the greatest possible extent and to protect Russian citizens,
Our colleagues-legislators also acted very quickly. They approved an entire package of measures, including loan repayment holidays, as well as simplified government procurement, a new amnesty on capital, a possible moratorium on planned audit checks of small and medium-sized businesses in 2022, as well as IT companies in the next three years.
The State Duma adopted these documents in three readings at once. The Federation Council followed suit that same day. The President signed the relevant law yesterday.
I would like to thank the deputies and the senators for their responsible approach. You acted just as promptly as you did two years ago when it became necessary to adopt decisions to deal with the Covid-19 pandemic. You supported the Government’s initiatives and made it possible to respond to any challenges without delays and to overcome current difficulties, so as to assist people and businesses in this complicated situation. We hope to maintain the same constructive and effective cooperation with legislators in the future.
Yesterday the President signed an executive order giving the Government the power to prohibit or restrict export and import of products, equipment, components and materials in the context of unfriendly actions by some countries and to compile a list of such goods. This decision will help us ensure the economic security of the country and the uninterrupted work of industries and agriculture.
The Government has promptly made the necessary preparations. The documents needed to implement the President’s executive order will be signed shortly.
And now let’s get down to our agenda. We continue working to enhance our economic stability amid the increased sanctions. Today we will discuss several other legislative initiatives in addition to those that were adopted last week. All of them are necessary for accelerating our adjustment to the new situation and for supporting our citizens and enterprises at this time of troubles.
We will discuss draft laws to simplify the registration of foreign companies in special administrative regions and to expand the functions of special economic zones.
Some measures will concern the customs area. In particular, it has been proposed to simplify the regulation of imports.
A large package of measures has been prepared to help our construction industry. Our main goal in the current situation is to prevent the stalling of construction projects. This is important above all for millions of our citizens who need new houses and flats, as well as for the relevant businesses.
It has been proposed to simplify the preparation of urban planning documents and the procedure for holding public hearings on them. The allocation of land plots should be accelerated. If necessary, current land lease contracts should be extended. Moreover, the relevant authorities will have the power to approve benefits for leaseholders.
The registration of rights for completed construction projects will also be simplified. This will only involve a skeleton package of documents.
A series of decisions have been prepared for the transport sector. We will help air carriers maintain their foreign aircraft. We will prepare response restrictions for countries that have prohibited our sea vessels from calling at their ports. As for railway companies, we will reduce the ability of some international organisations to influence their functioning.
The Government also proposes supporting the hotel business by reducing some payments to the state. The situation in this sector is quite complicated.
There are several other amendments we propose making to our legislation. For example, we propose cancelling income tax for bank deposits over 1 million roubles.
This tax came into effect on 1 January 2021 under which a 13 percent tax was levied on part of the income from such deposits, regardless of whether the money was deposited with one or several banks.
After the key interest rate was raised, our lending organisations raised the interest rate on deposits, which means that the income on them will increase along with the tax to be paid this year.
The cancellation of the tax on interest income for last year and also this year 2022 will support our citizens and will help them to keep their savings, which is very important in the current situation.
It has also been proposed to lift the tax on saved interest on loans taken out from employers.
Another draft law we will be discussing today concerns fixing the foreign currency exchange rate for the purpose of thin capitalisation. In other words, companies obligations to the state that take out loans to finance their operations will not increase because of growing dollar or euro exchange rates.
Moreover, some companies will be able to make advance monthly payments based on actual revenue.
It has been proposed that corporate property tax should be calculated based on cadastral value as of the beginning of 2022.
Another decision concerns car owners. It has been proposed to reduce the number of those who are paying an increased transport tax by increasing the list price of vehicles from 3 million to 10 million roubles. This norm will come into effect this year.
Some of the amendments we will discuss today concern relations between company owners. Russian joint stock companies will be able to protect their information from manoeuvres by representatives of unfriendly countries. With this aim in view, we plan to increase the smallest amount of shares whose holder may request company documents and litigate against company transactions and the actions of the company or its leadership. To reduce the sanction risks of our fiscal organisations, the Board of Directors of the Bank of Russia will have the right to determine the list of information items that can be kept confidential.
A ban can be imposed on transactions with insurers, reinsurers and insurance brokers from unfriendly states. This ban can be expanded to the contracts that became effective before this executive order was signed, with the exception of cases where the Bank of Russia has issued a special permit for this.
We also have a proposal to adjust the credit holiday regulations. We have drafted proposals on other amendments to the existing legislation as well.
Colleagues, these are just some of the planned amendments. The Government is preparing them systematically on a permanent basis. To coordinate its efforts, the Government has compiled an action plan to support the economy under the growing sanctions pressures. We have already included some of the measures we discussed last week and will review today. This applies, for instance, to measures to stabilise the financial markets. In the future, we will proceed as necessary.
We will continuously adjust the plan based on new developments. Not all measures are about direct financial support. Much will be done to improve the business climate – simplify regulations, reduce administrative restrictions and costs, introduce tax incentives and liberalise the Criminal Procedure Code and the Administrative Code.
This sanctions-triggered turbulence will eventually die out and go away, but investment requires our support even during this credit squeeze.
The Government will continue to assist our agricultural producers as well.
Some regions, including the Southern Federal District and the North Caucasus, have already begun their spring sowing process. It is important to conduct this without a hitch. We have allocated over 10 billion roubles in the budget to grant agrarians easy short-term loans.
However, the requirements of the industry are much greater, in part, because of the outside pressure on our country. Moreover, there is a growing demand for food and agricultural raw materials in world markets. Under the circumstances, we must provide agriculture with all they need for a successful sowing campaign.
The Government will earmark an additional 25 billion roubles for agricultural producers. With this funding, they will be able to attract over 150 billion roubles in short-term loans at preferential rates.
I would like to ask the Ministry of Agriculture to strictly control the targeted and efficient use of these funds.
In addition to thinking about the upcoming harvest, we need to maintain a price balance in the food markets. So we are attentively monitoring prices on the most important food products that are classified as socially meaningful for people like bread and baked products. After all, there is growing demand for grain from Russia, and prices are going up. In this situation, we must primarily provide grain to our domestic baked goods industry.
The Government will allocate 2.5 billion roubles to compensate for some of the losses sustained by our businesses on bread and flour production.
Another major goal is to upgrade the transport system. The economy requires quality road infrastructure all over the country. We will earmark over 160 billion roubles from the federal budget to build it.
We will transfer the funds to specific facilities on federal and regional roads in Tatarstan, the Primorye Territory, the Belgorod, Kemerovo, Moscow and Yaroslavl regions and the Nenets Autonomous Area. These funds will pay for rebuilding major roads, building city bypass routes, and major repairs on bridges across the Volga River.
As a result, over 750 kilometres of federal motor roads and more than 290 kilometres of regional roads will be upgraded or built.
This funding will expedite the implementation of major infrastructure projects that will in turn support related branches of the economy. These highway projects will improve transport connections between regions.
