Tax Benefits for Skolkovo Innovation Centre Participants.

25.10.2010

Goltsblat BLP advises that Federal Law 244-FZ dated 28 September 2010 "On the Skolkovo Innovation Centre" and Federal Law 243-FZ dated 28 September 2010 "On Amendments to Certain Legislative Acts of the Russian Federation in Connection with Approval of the Federal Law "On the Skolkovo Innovation Centre" came into effect on 30 September 2010.

In particular, the above laws provide for tax benefits for Skolkovo project participants - Russian legal entities established exclusively for the activities referred to in these laws and included in the participants' register for 10 years.

Skolkovo Innovation Centre Participants:

  • are not required to keep accounting records unless their annual sales proceeds exceed 1 bln roubles and provided that they maintain income and cost records pursuant to Chapter 26.2 of the Tax Code of the Russian Federation. If this limit is exceeded, full accounting records must be kept from the following year.
  • do not pay profits tax until their annual proceeds exceed 1 mln roubles, after which they become taxpayers, but pay profits tax at a zero rate until the year in which their profits top 300 mln roubles. From this year on, a project participant pays tax at the general rate, including penalties;
  • do not pay VAT (except on goods imports into Russia) or property tax until their aggregate profits exceed 300 mln roubles from the beginning of the year in which their sales proceeds top 1 bln roubles. From the beginning of this period on, a project participant pays tax at the general rate, including penalties;
  • pay insurance contributions only to the Pension Fund of the Russian Federation at a 14% rate (from 1 January 2011) until the 300 mln RUB profits mark is reached. Once the right to this benefit is lost, insurance contributions for the relevant period shall be reinstated and paid together with penalties.

Benefits may be waived, but they will not be provided again.  If the status of project participant is lost before 10 years are up, taxes and relevant penalties are payable from the beginning of the period in which this occurs.

In addition, all legal entities and individual entrepreneurs participating in the project may reclaim VAT and customs duties paid through the management company when goods are imported (except for excisable goods) for construction and research at the Skolkovo Innovation Centre. The Government of the Russian Federation may establish specific provisions regarding granting of budget subsidies for refunding VAT and customs duties.

For additional information, please contact:

Andrey Shpak,
Partner,Tax consulting/ tax litigation
Goltsblat BLP,
T: +7 (495) 287 44 44,
E: info@gblplaw.com

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