The Ministry of Digital Development recently proposed reducing companies’ corporate taxes by the amounts of their expenditures on domestic software and computer equipment.

The proposal, which is currently being considered at higher Cabinet levels, is part of proposed measures to support the domestic IT sector, the US-Russia Business Council quoted the Russian business daily Vedomosti as reporting. Other recent proposals have included a moratorium of regulatory checks of domestic IT companies and a requirement for foreign IT companies to pay individual income taxes for Russian software developers they employ remotely.

The government currently provides subsidized loans to companies that buy domestic software and computer equipment. In 2020, the government reduced employer social security contributions for domestic IT companies from 14% to 7.6% and the corporate tax from 20% to 3%.

The Russian IT services market was estimated at $5.57bn in 2019. Although some domestic IT products such as antivirus software are popular with domestic consumers, the overall market share of domestic software and hardware is estimated at about 5%.