Demand for tax instruments encouraging capital investment by Russian organizations

Abstract

Subject. The article addresses tax incentives for capital investment in the framework of corporate income tax, and their effectiveness, estimated as the scale of application of incentive instruments. Objectives. We explore tax instruments intended to boost the investment activity of businesses in Russia, in the context of their demand by Russian organizations. Methods. To estimate the efficiency of tax incentives for boosting investment, we calculate absolute and relative values of reduction in the tax base, according to the data of the Ministry of Finance of the Russian Federation, the Federal Tax Service of Russia, and Rosstat, and the number of companies, using these tax instruments. Results. The set of tax incentives and preferences focused on stimulating the investment activity within the income tax is quite wide, however, their application imposes significant restrictions on taxpayers. The effectiveness of applied tax incentives remains rather low. A relatively modest number of organizations use early depreciation mechanisms for acquired fixed assets to reduce income tax. Bonus depreciation is more common, however, it is applied by a sufficiently low number of taxpayers, although to a significant proportion of newly entered items of property, plant and equipment. Accelerated depreciation, both the declining method of depreciation and increasing coefficients, are used less frequently than bonus depreciation. Conclusions. Prospects for expanding the investment activity of a business can be associated with investment tax deduction. Its effectiveness assessment is possible only in the medium term.