Open AccessFeatures and Problems of Tax Incentives for Small Software Companies in Russia
Author(s) -
Владимир Громов
Publication year - 2022
Publication title -
finansovyj žurnal
Language(s) - English
Resource type - Journals
eISSN - 2658-5332
pISSN - 2075-1990
DOI - 10.31107/2075-1990-2022-1-8-25
Subject(s) - incentive , tax reform , indirect tax , public economics , tax avoidance , business , double taxation , ad valorem tax , tax incentive , value added tax , direct tax , revenue , tax credit , state income tax , economics , tax revenue , government (linguistics) , market economy , finance , linguistics , philosophy
Since 2021, Russian IT companies have been stimulated by enhanced tax incentives, which allow one to pay corporate income tax only to the federal budget as well as pay social security contributions at a heavily reduced rate. While medium and large businesses get benefits from the new government support, small enterprises are traditionally supported through the simplified taxation system, which offers alternative tax measures. For this reason, the purpose of the article is to identify problems which could arise when new incentives are distributed in the economy. Based on the structure of the IT industry and the conditions of reducing taxes, it is argued that fairness of taxation is broken as small IT (software) companies constitute the majority and, at the same time, have little chance to be included in the tax incentive scope. The new privileges addressed to IT companies actually favor some businesses with high turnovers, and even the favorable simplified taxation system cannot completely eliminate distortions in the tax burden level. Along with this, sub-central governments have a strong motivation to raise their tax revenues within the framework of vertical tax competition. There is a need to make the tax system more neutral as well to harmonize tax regimes, and the article provides relevant proposals.