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Law on tax incentives for business in the Arctic signed by Putin

Law on tax incentives for business in the Arctic signed by Putin
Photo: pixabay.com

Vladimir Putin signed a law introducing profit tax and VAT incentives for investors in the Arctic. Also, entrepreneurs will be provided with a deduction for mineral extraction tax.

The new law provides for a zero rate on income tax and VAT credited to the federal budget. It will operate only in those regions that will reduce their part of the tax rate. The validity period of preferential rates is ten years from the date of receipt of the first profit.

In this case, the company will have to keep separate records of income and expenses: income and expenses received under the investment agreement should be allocated from other activities. At the same time, if about 90% of the profit was obtained from the main activity declared in the investment agreement, then the tax rate will be zero for the entire tax base.

Icebreaker fleet services also have a zero VAT rate. At the same time, such measures repent of export traffic.

The MET tax deduction will be applied from 2021 to 2032 and will apply to oil shale, peat, commodity ores, non-metallic raw materials, diamonds and other minerals in the Arctic zone, with the exception of coal and hydrocarbons. Mining should also go to new subsoil areas, the depletion of reserves of which is less than 0,001 at the beginning of 2021. It can also be deposits put on balance after 2021. The deduction cannot exceed 50% of the tax amount for the corresponding tax period.

The law will come into force in a month. The MET standards will be effective from January 1, 2021.

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