MOSCOW, January 15. /TASS/. Russian President Vladimir Putin has urged the government and lawmakers to speed up adoption of a package of draft laws on the protection of investments and investment promotion.
"We have agreed not to change the tax conditions for business for six years, thus providing a wider horizon for investment planning. I am calling on the lawmakers and the government: we need to accelerate the adoption of a package of bills on protection and promotion of investments," Putin said.
He noted that the tax conditions for large, significant projects should be unchanged for up to 20 years, and the requirements and standards for the construction of production facilities should be set for three years.
"These guarantees to investors should become the norm of law. Of course, not only large projects, but also business initiatives of small and medium-sized enterprises should receive support," the President added.
On December 10, 2019, the State Duma, lower house of the Russian parliament, adopted a bill on the protection and promotion of investments in the first reading.
The bill provides for two investment regimes.
The general investment regime implies a three-year deferment of enactment of any norms that worsen the terms of investment activities.
The project regime is focused on large investment projects and guarantees stable tax conditions (for income tax, property tax, transport and land taxes, terms of payment and the procedure for VAT refund) for a period of 6 to 20 years.
The project regime has an access threshold. For example, for healthcare, education, culture and sports projects with a total budget of at least 1 billion rubles ($16 bln) the minimum amount of own investments is set at 250 mln rubles ($4 mln).
For projects in industries, agriculture and the digital economy the minimum amount of own investments is 1.5 billion rubles ($24.4 mln) (if a total budget of a project is at least 7 bln rubles ($113 mln). For projects in other sectors of the economy it is at least 5 billion rubles ($81 mln) (with a total budget of a project amounting to 25 billion rubles ($406 mln).
National Wealth Fund investment
The funds of the National Wealth Fund (NWF) should be invested in cost-effective projects to remove infrastructure restrictions once the Fund’s liquid part reaches the threshold of 7% of GDP, the President stated.
"Part of the National Wealth Fund allocated in foreign exchange currency is expected to surpass the 7% of GDP mark as early as this summer. We have formed such amounts of reserves that ensure stability and security, which means we can invest additional revenues in the national economy. Cost-effective projects that remove infrastructure restrictions should become prior," he said, adding that they include highway bypasses of big cities and roads connecting regional centers.
President noted that such projects would spur growth of SMEs, tourism and social activity in Russia’s regions.
In accordance with the fiscal rule, Russia’s Finance Ministry purchases foreign currency every month using additional revenues from oil sales above the certain level, which it allocates for reserves. The government will be able to start investing the funds of the NWF, in which oil and gas revenues are accumulated, once its liquid part exceeds 7% of GDP. The Finance Ministry projects that to happen this year, whereas by the end of 2020 the Fund will reach 8.5% of GDP.
At the end of November 2019, the Finance Ministry submitted the concept of investing NWF funds to the government. The strategy envisions two options: investment in foreign assets to avoid the pressure on the ruble’s exchange rate and inflation, or in domestic assets, in projects generating additional investment demand by private businesses. The ministry expects the National Wealth Fund to reach 8.5% of GDP by the end of 2020.