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2 years tax free for first time entrepreneurs

0 24 January 2014

A government package to boost entrepreneurialism was announced last week by Prime Minister Dmitry Medvedev. The Russian Finance Ministry is now working on a bill to put the intitiative into effect before the end of the year. 

The package includes a two-year tax holiday for first time entrepreneurs in the manufacturing, service and research sectors. In the Far East and Eastern Siberia, the holiday will be five years. 

It also promises the creation of a Federal Guarantee Fund designed to make it easier for businesses to get loans. At present 80 regional funds issue guarantees for commercial loans of up to $2.95 million when the borrower does not have sufficient collateral to satisfy the bank issuing the loan. The new fund will be established to back up the regional ones, allowing them to issue more guarantees. The government has also set aside $628 million to subsidise small businesses this year.

Another policy aimed at boosting small and medium sized businesses came into force on January 1st 2014. Now at least 15% of government contracts are reserved for small firms and not-for-profit organisations. This policy is to be extended to all contracts issued by major state-owned corporations and natural monopolies, and the proportion of contracts reserved for small businesses could increase to 25% by 2018.

These stimulus measures will also apply to foreign entrepreneurs as long as they are working independently. However, if the company was founded or funded by a foreign legal entity then it must seek Russian partners in order to qualify. If more than 25% of the venture is foreign-owned then it will not be eligible for the government’s schemes. 

Source: rbth.com

Top image via Shutterstock.

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