The Russian Government recently drafted a resolution which would significantly expand the application of a special tax deduction for R&D activities, USRBC quoted the Russian Government Portal of Pending Regulations as announcing.

Companies may expect to deduct certain R&D expenditures multiplied by 1.5 from their taxable revenues. The draft resolution would extend the special deduction to R&D activities in dozens of additional areas, including:

• production of equipment for deep water drilling in the Arctic;
• production of automotive components, electric and self-driving vehicles;
• biomedical engineering to create artificial human tissues and organs;
• development of new drugs for treatment of cancer or highly contagious diseases;
• certain artificial intelligence technologies;
• cyber security and the Internet of Things;
• 5G network technologies;
• smart grid and other energy saving or advanced power generation technologies; and
• waste recycling and industrial pollution reduction technologies.

A supplementary note to the draft resolution said that it would contribute to the implementation of state programs to develop domestic production of automotive components, construction and agricultural machinery, and IT and medical equipment by encouraging investment in R&D. The note said that expanding the tax benefit would help reduce production costs and increase competitiveness of domestic high-tech goods.