President’s keynote St. Petersburg address focuses on modernization

Russian President, Dmitry Medvedev, has announced that Russia will abolish capital gains taxes on long term direct investments, in order to boost economic modernization.

Speaking in St. Petersburg at the International Economic Forum, the Russian leader said that in order to encourage investment into economic modernization the government would be creating a strategic investment fund matching every 3 roubles from strategic investors with a rouble. He added that ending taxes on long term capital gains would be a key drawcard in luring global investors to participate in Russia’s economic transformation.

“As for improving the investment climate, Here I also hope that we're moving onwards. As of January 1st this year we’ve expanded the possibility to apply zero tax rate for profit tax in relation to dividends. And today I’m pleased to announce that in Russia as of 2011 we will fully eliminate the capital gain tax for direct long term investments. “

At the same time the President announced that from next year budget funds would be more clearly targeted to achieving specific outcomes, and promoting more efficient expenditures.

“From 2011 we will be seriously changing our fiscal policy reorienting the budget to deliver specific programs, creating greater emphasis on the main priorities of our development. We've made a very strong and important decision to move away from funding the government institutions unrelated to deliverables. Instead we will fund changes improvements new projects and specific deliverables.”

The President added that the number of strategic companies would be cut five fold and that the tax burden on domestic companies would be eased as soon as possible.

"We shall return to the issue of tax burden easing for businesses in the next few years if the global and Russian economies recover in favorable conditions. If everything goes to a favorable scheme,"