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The government is ready to provide tax incentives for manufacturers of automotive components

The government is ready to provide tax incentives for manufacturers of automotive components

The government is ready to provide tax incentives for manufacturers of automotive components.

This follows from the plan approved by the Prime Minister Dmitry Medvedev to implement the development strategy for the automotive industry until 2025, the newspaper Vedomosti writes. One of the initiatives concerns the “development of proposals” to reduce the VAT rate for automotive components (now - 20%). This is necessary to stimulate demand for automotive components in the domestic market, the document says. It is also recommended to prepare proposals for tax incentives for investment in research and development in the development of technologies for the production of automotive components. This will create additional conditions for the development of production technologies for competitive automotive components in Russia, the plan says. Tax incentives are a useful tool to support existing component plants, participants in the automotive component industry say. But for new enterprises, investments are required not only in R&D, but also in construction, organization of production, purchase of equipment. Such large-scale investments cannot be realized without state participation in the form of subsidizing part of the costs and soft loans. And this confirms the experience of countries such as China and Korea, which have created high-tech industries from scratch.