Page 63 - RusRPTOct21

($10illion) at the same time that budgets for the security services are rising 28% – an additional 2 trillion rubles in total starting with a roughly 500illion ruble increase for 2022. The increase in defense spending is notable given the problems restructuring debts last year and earlier this year as well as the need to supply contracts to help defense manufacturers transition into civilian production.
Russia’s Ministry of Finance has drafted a law that would retrospectively raise income taxes for companies that spent more money on paying out dividends than on capex over the past five years, the Russian Steel Association reported yesterday, 20 September. According to the association, the new tax code is 20-25% vs. the current rate of 20%. Among the association’s main concerns relating to the proposed legislation is the retrospective application of the new legislation, which would detrimental business confidence and tax planning. The new legislation could create a challenging tax environment for holding companies that pay and receive dividends and have little exposure to capex. Believe the new legislation should have a negative impact on the market’s outlook on Russia’s metals and mining sector.
The Ministry of Finance has prepared options for raising the income tax for companies that have spent more on dividends over the past five years than they have invested. For them, the tax rate can grow from 20 to 25-30%. In March, President Vladimir Putin called on the owners of large Russian companies to invest most of their funds domestically. In his opinion, instead of paying dividends and placing funds in "safe harbors", Russian companies should "direct them to the development of their own or new businesses in Russia." And the government now faces the challenge of creating favorable conditions for such domestic investment, he added.
The draft federaludget for 2022-24 includes RUB16bn ($219.4 million) gained annually through work doney prisoners. A program proposed by the director of the Federal Penitentiary Service, Alexander Kalashnikov, replaces migrant laborers with prisoners to work on construction projects and forest restoration.
6.1.4 Budget dynamics - National Projects
The government has still not published the updated the 12 national projects, nor the National Goals Strategy that supersedes it.
The latest announcement was a decree issued February 3, allocating responsibility for a Strategy of Socio-economic Development to 2030. This will preserve the National Projects in the period to 2024,but also build a longer-term growth strategy through to 2030. There will be five main operational centres within the government as follows, with the responsible
63 RUSSIA Country Report October 2021 www.intellinews.com