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Zero VAT for the Russian electronics “for” and “against”

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June 14, 2020
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Zero VAT for the Russian electronics “for” and “against”Natalia Solovyova | 14.06.2020

Нулевой НДС для российской радиоэлектроники: «за» и «против»

The draft Federal law offers to support the domestic market for the production of electronic products, freeing its members from payment of value added tax, called
contradictory reactions. The idea was criticized by government officials, but she found support among the leadership of the Ministry of industry and trade of the Russian Federation. What changes will the draft law – yet
unknown, but the parties involved insist on its speedy acceptance.

A proposal to reduce the VAT rate to 0% for the Russian manufacturers of electronics was made by a member of the Federation Council Alexei Dmitrienko. In early March 2020 he introduced in
The state Duma the Draft Federal law “On amendments to article 164 of the Tax code of the Russian Federation”. As explained
the author of the bill in the explanatory Memorandum, the market of electronic products in government purchases and purchases by companies with state participation the share of procurement of Russian goods in the last
a few years decreases. According to data of the unified information system in the sphere of procurement, if in 2016 the total volume of purchases of electronic products the share of Russian products was
33% (200 billion rubles), then in 2018 it dropped to 18% (127 billion).

According to expert estimates, indicates the author of the document, the total amount of procurement of electronic products in government procurement and procurement by state companies in 2020 will exceed 1 trillion rubles, and will annually
to grow by approximately 7-10%. The proposed bill measures – taxation of the Russian radio-electronic equipment at a tax rate of “0” on VAT and the establishment of a consolidated register of Russian
electronic products to be identified (the procedure for its formation and maintenance must be determined in accordance with Federal law No. 488-FZ “On industrial policy in the Russian
Federation”) is able to significantly support and stimulate domestic producers, will create a long-term mechanism of development of Russian production and to increase technological
the stability of the infrastructure of our country. For 10 years to “reset” the amount of additional financial benefits in comparison with foreign products in the supply in public procurement and procurement
state-owned companies can be more than 200 billion rubles.

Besides, as written by the experts contained in this idea was supported by the Ministry of economic development of the Russian Federation and the Russian military-industrial Commission.

Against the idea of A. Dmitrienko by the Government of the Russian Federation. Leading media quoted the conclusion of the Deputy Prime Minister — chief of staff of the Government Dmitry Grigorenko, appeared
at the end of may 2020 In the document, with the status of the draft formal opinion, the official pointed out that the zero VAT in respect of sales of domestic electronics will be around
essentially, by subsidizing from the Federal budget organizations that implement these products. In his opinion, be appropriate required to provide support under the relevant state
programs – this will enable effective monitoring of funds budget funding.

In turn, support the initiative of “zero” VAT by the Ministry of industry and trade of the Russian Federation. In early June 2020 in the Government and the Board of the military-industrial
Commission of the Russian Federation received a letter signed by the Deputy head of the Ministry of industry and trade of the Russian Federation Oleg Bocharova, which stated that the proposed bill Alexei Dmitrienko initiative will give the Russian
manufacturers of electronic the opportunity to take a leading position in the global market. As an example, given the conditions that enable their producers countries
the main exporters of these products (China, Taiwan, and South Korea). Among them – decrease or abolish a number of taxes and direct budget financing of the entire industry.

Measures proposed by the Government – subsidized enterprises in the amount of VAT incurred is exempt from tax, able to inhibit the development of this sector of the economy and even lead
to unpredictable negative consequences.

The document also States that the draft Federal law proposed by Alex Dmitrienko, must be taken prior to July 26, 2020, when the state Duma finishes spring session of its work. In
currently the bill is in the status of preliminary review in the state Duma.

taxation Russian it companies, Taxes

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