RVI organization has asked the government for tax incentives for video game developers and publishers
Amid the preparation of amendments to the Tax Code, the organization for the development of the video game industry (RVI) sent an appeal to Prime Minister Mikhail Mishustin, requesting the implementation of new tax incentives for companies representing the sector.
This was reported by the publication "Vedomosti".
Let's recall that the government has prepared a document, according to which:
- The zero VAT for transactions involving the sale of rights to software included in the Russian software registry may be canceled;
- The VAT rate will increase to 22% next year;
- The threshold for paying VAT will decrease to an annual turnover of 10 million rubles;
- The preferential rate for insurance contributions for IT companies will increase to 15%.
According to Vasily Ovchinnikov, CEO of RVI, paying the full VAT on the sale of software rights will "directly affect the sale of products specifically in the Russian market, and also complicate the use of benefits for export sales, which constitute the dominant share for most companies in the industry: if the benefit is canceled, studios will have to prove each export transaction with contracts, acts, and bank statements in accordance with the currency control law, which will create a significant administrative burden."
He also notes that "increasing the preferential rate of insurance contributions to 15% will also be critical for the industry, since 80% of video game studios' expenses are payroll: the new rate may lead to the fact that doing business in Russia, at least for some, will simply become unprofitable."
Regarding the necessity of paying the mentioned taxes and contributions, Ovchinnikov asserts, this will "create difficulties in fulfilling agreements on the development of projects for which subsidies were allocated by the Internet Development Institute (IRI)."
Therefore, in the letter to Mishustin, the CEO of RVI proposed:
- Exempting Russian video game developers and publishers from paying VAT on game and software sales in the local market;
- Securing for them a preferential insurance contribution rate of 7.6%;
- Exempting video game studios from paying profit tax for five years.
According to "Vedomosti," Yevgeny Komar, director of the government's Information Technology Department, has already instructed the Ministry of Digital Development and the Federal Tax Service to review this appeal.