Russian Defense Industry Gets Tax Benefits

26.03.2012 Russian Government will restructure tax debts of companies engaged in execution of state defense order, writes Vedomosti on March 26 referring to undisclosed federal officials.

According to the newspaper, about RUR 100 bln is in question. It is uncertain what portion of that money will be written off and how much tax payment will be postponed. The reason for such large-scale tax benefits is problems that defense-oriented companies face.

According to Russian Federal Budget Law covering 2012 and planning period of 2013-2014, the government has a right to write off debts of defense companies either partially or in full. Once the government makes a decision on tax restructuring, this process must start until Sept 2012.

In 2011, Russian companies failed to meet commitments on 84 defense contracts to the amount of RUR 42 bln. Besides, defense ministry postponed deadlines of 197 contracts to the sum of RUR 105.8 bln. State Defense Order 2012 will be somewhat RUR 732.5 bln.

Largest executors of defense order are United Shipbuilding Corporation, Uralvagonzavod, state-led corporation Rostehnologii, United Aircraft Corporation, Russian Helicopters, etc.