Russian Economy Ministry Proposes Raising Federal Investment Tax Credit to 12%

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The Russian Ministry of Economic Development has proposed increasing the federal investment tax credit (FITC) from the current 3% to 12% of investment volume, according to Vedomosti. Additionally, the ministry is considering the possibility of completely eliminating the federal portion of corporate profit tax for companies using this mechanism. The proposal has been supported by business associations and is currently being reviewed by relevant government agencies.

Representatives of the Russian Union of Industrialists and Entrepreneurs (RSPP) and "Delovaya Rossiya" confirmed that this option has been agreed upon by businesses. The Ministry of Economic Development acknowledged that raising the tax credit rate to 12% is being considered as one of the working scenarios, with the parameters of the instrument subject to adjustment based on implementation results. The Ministry of Finance is aware of the proposals but suggests revisiting the issue after evaluating its use over the course of a year.

The need to modernize the FITC was previously supported by President Vladimir Putin. Following a meeting of the Council for Strategic Development, the government was instructed to update the mechanism and ensure its operation in a modernized form starting from 2026. The deadline for implementing this directive is March 1.

The federal investment tax credit has been in effect since the beginning of 2025 and allows companies meeting certain criteria to offset part of their capital expenditures on equipment, machinery, and patented intangible assets by reducing their federal share of corporate profit tax. The tool was originally designed to mitigate the increase in the corporate profit tax rate and stimulate investment activity.

However, the actual use of the mechanism has been significantly lower than expected. With a set limit of 150 billion rubles per year, businesses have opted for only a small portion of the available amount. According to business associations, one of the reasons is the low size of the tax credit and the complexity of administration, which often makes the costs of obtaining the credit disproportionate to its benefits.

The proposed increase in the tax credit rate to 12%, according to business representatives, could significantly enhance the attractiveness of the tool. In addition to increasing the percentage of the tax credit, there are discussions about expanding the list of industries, including logistics and transport, and the possibility of combining the FITC with other government support measures, such as agreements on the protection and encouragement of capital investments.

Experts note that a higher tax credit is particularly important in conditions of expensive financing, when it is more difficult for companies to launch new projects. Strengthening the tax incentive, they estimate, could contribute to increased investment, job creation, and support for economic activity.

At the same time, lawyers point out the need for further adjustments in enforcement. In practice, the application of the FITC is limited not only by the norms of the Tax Code but also by clarifications from the finance ministry, which in some cases narrow the possibilities for transferring the tax credit within a group of companies and using the remaining benefit.