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Russia Offers Tax Breaks On Social Infrastructure Investment

Wednesday, February 17, 2010

The Russian State Duma Committee on Budget and Taxes has recommended, and the lower house of parliament has adopted at first reading, a bill amending the Tax Code in respect of charging of investors for the development of social infrastructure.

The amendments, effective from January 1, 2010, relate to investors who have agreements with local government on urbanization development or investment treaties relating to transportation, engineering, social or municipal infrastructure under construction or reconstruction.

Expenses relating to such construction or reconstruction become off-settable against taxable profits provided that they are spread evenly over a period of not less than five years as determined by the taxpayer, and in addition that ownership of the underlying assets are transferred free of charge to the local authority on completion.

Investors from January 1, 2010 will be entitled to take into account the costs they incurred during the period from January 1, 2007 to January 1, 2010. However, for organizations involved in "investdogovory" or "social investment" projects, the benefits are limited to expenses for the period from January 1, 2007 to January 1, 2011.