интеллектуальная собственность

Tax benefit for Research, Development and Engineering expenses: expanding the application procedure

Tax benefit for Research, Development and Engineering expenses: expanding the application procedure

LEGAL DIGEST, NEWS \ 30.08.2021

The President of the Russian Federation has signed a Law amending the Tax code of the Russian Federation. One of these changes is the establishment of tax benefits in the field of intellectual property.

Starting from August 2, 2021, the authorities of the territorial entities of the Russian Federation are entitled to set reduced profits tax rates for companies engaged in activities to grant rights to use the results of intellectual activity (RIA) under a licensing agreement.

At the same time, the exclusive intellectual property rights should belong to the company itself and be registered with the Federal Service for Intellectual Property (Russian acronym “Rospatent”).

Companies will be able to apply a reduced profits tax rate if they keep separate records of income (expenses) received (incurred) within the framework of such activities carried out in the relevant territorial entity of the Russian Federation and income (expenses) received (incurred) from other activities.

The territorial entities of the Russian Federation are assigned the obligation to determine:

  • types of RIA, the profit from the granting of rights to use which can be taxed at a reduced tax rate;
  • size of the tax rate;
  • additional conditions for the application of such a tax rate.

Another change concerns the expansion of the list of costs relating to the Research, Development and Engineering (RDE) expenses starting from January 1, 2022.  Such costs include:

  • expenses for the acquisition of exclusive rights to inventions, utility models, industrial designs, selection inventions, computer programs and databases, integrated circuit topologies under an agreement on the assignation of exclusive rights;
  • expenses for the acquisition of the rights of use of specified RIA under the licensing agreement.

The composition of the remaining expenses is given in the article 262 of the Tax Code of the Russian Federation. It is important to remember that the RDE expenses should be included in the List approved by the Decree No. 988 of the Government of the Russian Federation dated December 24, 2008 (List). This type of expenses can be included in the actual RDE costs with an increasing coefficient of 1.5, thereby reducing the tax base for profits tax. Expenses can be taken into account as part of:

  • other expenses associated with production and sale;
  • the initial cost of the object of intangible assets (in the case when the exclusive right to RIA is obtained as a result of RDE).

In order to apply such a benefit, companies have to submit to the territorial bodies of tax services a report on the RDE performed together with a profits tax declaration based on the results of the tax period in which scientific research was completed. After that, the tax service appoints a special examination, which finds out whether the company’s developments are included in the List and whether there is a novelty in them. And if the result of such a check turns out to be positive, the company has the right to apply the benefit.

Please note that the tax benefit for RDE expenses is not the only type of preference that companies can use. Within the framework of the current “Tax manoeuvre”, companies can count on the following types of state preferences:

  • reduced profits tax rate of 3%;
  • reduced rates of insurance premiums of 7.6%;
  • VAT exemption for types of activities in accordance with sub-clause 26 of article 149 of the Tax Code of the Russian Federation.

Russian organizations that carry out activities in the field of information technologies and meet a number of requirements can apply benefits within the framework of the “Tax manoeuvre”. In the matters of the application of tax legislation and the use of tax benefits, please contact Acsour specialists.