Russian authorities authorized a financial advantage for businesses that co-fund Contributory Pension Systems (PPS)
Refresh on Tax Relief for Employer-Funded Long-Term Savings Program
Employers co-financing their employee's participation in long-term savings programs (LSS) may soon find relief in their tax obligations. According to Forbes, the Ministry of Finance’s bill on this matter has received government commission approval. The bill allows companies to treat amounts directed towards LSS co-financing as expenses, reducing their profit tax base.
Speaking on the matter, Deputy Minister of Finance Ivan Chebeskov explained, "This tax amendment provides employers with an additional tool for motivating and retaining employees, particularly appealing to small and medium-sized businesses."
As per a study in 2024 by "SberNPF" and Rabota.ru, 46% of employers showed interest in co-financing LSS for their employees, with 22% citing tax incentives as a must-have condition.
Launched in Russia in 2024, LSS is a voluntary, accumulative product for citizens featuring state participation. Contributions can come from personal funds, the employer, state co-financing, pension savings, and investment income. The co-financing period lasts for 10 years following the first personal contribution. As of January 31, 2025, the number of LSS contracts had reached 3.3 million, with over 245 billion rubles raised.
The emphasis on long-term savings programs is part of the Russian government's efforts to boost the national long-term savings rate to 40% of total balances, as outlined in broader policy directions. The Finance Ministry stresses the need for a stable tax system in supporting the business climate and investment.
While the search results do not provide specifics on employer-side LSS co-financing deductions, they suggest continuous attempts to align tax frameworks with savings and investment objectives. For definitive legislative language or official ministry statements, further research is recommended.
Did you know?- Employer-co-funding for LSS could potentially increase by 46%, according to a 2024 study by "SberNPF" and Rabota.ru.- A stable tax system is crucial for a favorable business climate, as stated by the Russian Ministry of Finance.- Finland proposed a plan for interest deduction exemptions for critical infrastructure projects, highlighting the global trend of linking tax policy with long-term investments in infrastructure.- The windfall tax on high-profit companies implemented in 2024 was not extended to 2025, indicating a focus on targeted incentives rather than broad corporate tax changes.
- I'm not sure if there are specific deductions for employer-side LSS co-financing, but the search results suggest continuous attempts to align tax frameworks with savings and investment objectives.
- Additionally, a stable tax system is essential for a favorable business climate, as stated by the Russian Ministry of Finance.
- In Finland, a plan for interest deduction exemptions for critical infrastructure projects has been proposed, highlighting the global trend of linking tax policy with long-term investments in infrastructure.
- Furthermore, the windfall tax on high-profit companies implemented in 2024 was not extended to 2025, indicating a focus on targeted incentives rather than broad corporate tax changes in finance.
