Yandex (YNDX) is a major Russian high-tech company. Its core product is a search engine that is one of the four most popular search engines in the world by requests. Yandex also offers taxi, food delivery, media, carsharing services, etc. Yandex accounts for 58.1% of the Russian online search market.
Russian President Vladimir Putin made a statement on June 23, suggesting the introduction of tax concessions for Russian IT companies. The government is looking to reduce social insurance payments of accredited Russian IT companies that generate more than 90% of their income from the computer or database-related business etc. from 14% to 7.6%. The income tax of such companies may decline from 20% to 3%. Meanwhile, the Ministry of Digital Development would like to scrap a VAT tax concession that covers software sales stipulated by Article 149.2.26 of Russia's tax code to compensate for lower budget revenues. In addition, the project implies subsidies for IT companies, whose products are included in the register of Russian-made software.
The project is aimed at improving the Russian business climate for IT companies and supposedly stopping the outflow of IT entrepreneurs from the country. However, the government may cancel the 'zero' VAT rate to keep budget revenues intact, and this will hit financial entities (the main software consumers) hard and slow down the introduction of IT technologies in other industries due to considerably higher prices.
Following a meeting of officials and business representatives (Yandex, Mail, Telegram, etc.) in Kazan on July 9-10, Russia's Prime Minister Mikhail Mishustin said that IT companies will be able to continue to benefit from the zero VAT rate during software sales, if this software is included in the Russian software register. This could mean the government is set to hold discussions with the business.
