The Ministry of Digital Development announced plans to limit the list of IT companies receiving benefits.

The Ministry of Digital Development plans to impose a revenue threshold for it companies eligible for corporate income tax benefits. This threshold could increase from 0% to 20% in 2025. The decision will be made after analyzing tax data for 2023.

The Ministry of Digital Development, Communications and Mass Media plans to limit the list of IT companies eligible for profit tax breaks to a revenue threshold, the HEAD of the ministry, Maksut Shadayev, announced at a meeting of the State Duma Committee on Information Policy, Information Technology, and Communications, according to an RBC correspondent. The minister did not specify the estimated revenue threshold.

In 2025, the profit tax for IT companies may increase from 0% to 20%. The Ministry of Digital Development believes that the funds IT companies invest in their development will offset the lost taxes.

The Ministry of Digital Development, Communications, and Mass Media is currently in discussion with the Ministry of Finance about maintaining this measure for companies with a certain revenue ceiling. The two agencies agreed that a decision on the profit tax will be made after analyzing tax data on IT companies for 2023.

1C - WiseAdvice CEO Alexander Rulkov previously described the current benefits on the RBC Company page, stating that individual entrepreneurs working in information technology, as well as their employees, are not eligible for these benefits.

Three government tax incentive packages have been introduced in the information technology sector, encompassing various instruments, including grants, tax breaks, and insurance bonuses.

The first package was introduced in 2020 due to the pandemic.covid-19 , the second in 2021, and the third in March 2022, when Russian President Vladimir Putin instructed the government to exempt IT companies from paying income tax until the end of 2024 .

From 2023 to the end of 2024, IT companies may be exempt from corporate income tax, and social security contributions have been reduced to 7.6%. Domestic software may also be exempt from value-added tax (VAT). The government's decision to increase it from 18% to 20% came into effect in early January 2019.

Tax benefits are available only to registered IT companies included in the Ministry of Digital Development, Communications and Mass Media's registry.

To qualify for benefits, an IT company's primary activity must be the development and provision of software products, as well as the planning, design, preparation, operation, and support of computer systems.

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To obtain accreditation, more than 70% of a company's total revenue must come from activities in the fieldAt least 30% of revenue must come from sales of software or other software products.