International Accounting

Tax incentives for investment processes in Russia: Current practices and future development

Vol. 21, Iss. 2, FEBRUARY 2018

Received: 9 February 2017

Received in revised form: 28 February 2017

Accepted: 7 March 2017

Available online: 15 February 2018

Subject Heading: Tax and taxation

JEL Classification: E22, E62

Pages: 173–186

Semenova N.N. National Research Ogarev Mordovia State University, Saransk, Republic of Mordovia, Russian Federation

ORCID id: not available

Arapova O.A. National Research Ogarev Mordovia State University, Saransk, Republic of Mordovia, Russian Federation

ORCID id: not available

Importance Activation of investment processes is a crucial goal of contemporary economic policy of Russia. The investment processes is a cornerstone to set upon new industrial development. Tax incentives mechanisms should be the main driver for such investment activity.
Objectives The research evaluates the existing mechanism to boost investment processes in Russia and outline proposals for its improvement.
Methods The research relies upon principles of systems and comprehensive approaches. We applied techniques of scientific abstraction, induction and deduction, synthesis, comparative and matching analysis. The regression analysis helped to identify the main factors, which determined the level and trends in the investment process development.
Results The article systematizes key tax instruments to push the investing activity and evaluates the existing tax benefits in relation to corporate income, corporate property and value added in terms of stimulation of investment processes nationwide. We calculate the regression model reflecting how the volume of investment in fixed assets depends on the amount of investment tax credit.
Conclusions and Relevance To improve the tax incentives for investing activity in Russia, it is necessary to reform the depreciation procedure, make investment lease activities eligible for corporate income tax breaks, VAT breaks, lower VAT or transform it into sales tax, use investment tax credit more actively. The findings can be used by governmental authorities to outline key areas of tax policies in the future.

Keywords: incentive, activity, benefit, investment tax credit, bonus depreciation


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