Title: Employer Tax Break for Employees' Long-term Savings Underway in Russia
Potential Tax Incentives for Businesses due to Employees' Pension Payroll Contributions could be On the Table in Russia
Get ready, it's only a couple years away! Rumor has it that a new tax incentive for businesses to contribute to their employees' long-term savings accounts could go into effect as soon as 2026. The brainchild of President Vladimir Putin, this move was first proposed back in June 2024 during the St. Petersburg International Economic Forum. The industry'sBigwigs—including the National Association of Non-State Pension Funds (NAPF), Sberbank, VTB, and Gazfond NPF—are already on board and eager to see it come to life.
Here's the lowdown: under this proposed plan, companies will be able to chip in up to 12% of their payroll funds towards their employees' long-term savings accounts. This contribution can be deducted as a business expense, thereby reducing the company's taxable income.
The scheme's supporters believe it could be a major boon for long-term savings in the country, boosting participation rates and investment volumes. A recent survey by SberNPF and "Rabota.ru" found that about half of companies are ready to support their employees' long-term savings, but only if tax incentives are offered.
As for the current state of play, things are moving swiftly. Following Putin's initial proposal, the initiative has received the go-ahead from the Government's commission on legislative activities. So, it's looking like this game-changing incentive is well on the way to becoming a reality.
Riding the Wave of Investment
With this move, the Russian government is hoping to address the tight labor market by encouraging businesses to expand their social benefits packages. Commenting on the proposed incentives, Sberbank's senior vice president, Ruslan Vesterovskiy, noted that such measures would foster faster growth in long-term savings programs and participants.
The long-term savings program has been underway in Russia since January 1, 2024, with the government aiming to attract at least 250 billion rubles to the initiative in 2024, and at least 1% of the country's GDP in 2026. State co-financing of contributions for 10 years is available, up to 36,000 rubles per year, and employees are eligible for a tax deduction.
In 2024, a conskiej job well done—the program attracted about 220 billion rubles. For 2025, the government aims to almost triple that amount to 750 billion rubles. So, the signs are positive, and it looks like this tax break could be just what the doctor ordered for long-term savings in Russia.
Stay tuned for more updates on this exciting development. You can catch us on our Telegram channel @expert_mag for all the breaking news you need to know!
- Vladimir Putin, the President, has proposed a new tax incentive for businesses to contribute to their employees' long-term savings accounts, which could be implemented in 2026.
- Under this proposed plan, companies can deduct up to 12% of their payroll funds contributed towards employees' long-term savings accounts as a business expense, reducing their taxable income.
- VTB, Sberbank, and other industry leaders have expressed support for this initiative, believing it could significantly boost long-term savings in the country.
- The Russian government aims to attract 750 billion rubles to the long-term savings program in 2025, following a successful 2024 with about 220 billion rubles attracted.
