Putin gives officials a month to refine research tax relief for businesses

Vladimir Putin instructed officials on October 15 to refine the treatment of business research and development costs for profit-tax purposes within a month, following discussions with Delovaya Rossiya.

Economic Development Minister Maxim Reshetnikov said a bill had been prepared and largely agreed with the Finance Ministry. He said it could be submitted to the State Duma shortly if the proposals received support, but discussions with Moscow were continuing.

Titan Group board chairman Mikhail Sutyaginsky said the ability to deduct research and development spending with a multiplier of two was rarely used. He estimated that the relief had existed for eighteen years and covered seven hundred research areas, yet only fifty to sixty businesses used it annually. Reshetnikov put annual uptake at sixty-eight companies.

Businesses proposed five changes: clarifying industry-specific novelty criteria, replacing the list of eligible research areas with a list of exclusions, lifting limits on supercomputer research, big-data processing and AI modelling costs, simplifying supporting reports and allowing costs to be deducted as they arise.

Sutyaginsky said computing-related research costs could currently be recognised only within a limit equal to seventy percent of the wages of research employees. Rather than a full results report containing trade secrets, he proposed submitting a short report and sufficient supporting information for experts to verify the work.

Under the ministry's proposal, actual costs could be deducted immediately with a multiplier of one. The additional deduction needed to double the recognised spending would follow a patent and a report showing successful completion. Reshetnikov said many companies now treated research as ordinary production costs rather than seeking the relief.

Federal Tax Service head Daniil Yegorov said more than a thousand companies invested over one hundred and sixty billion rubles in research. He called the two-stage approach workable because it would prevent double deductions before a product was created.

Reshetnikov estimated that the changes would cost Moscow twenty billion rubles in revenue over three years. Yegorov proposed weighing those losses against future revenue generated by research results. Putin instructed officials to work to the tax service's proposed one-month timeframe.