The enterprises would be given a jump start to buy new equipment

In spite of slackening in the rate of economic growth, the Government of the Russian Federation proposed to make revaluation of the equipment belonging to companies in accordance with its market price as of January 1, 2015 in the next year.

The account is laid with the fact that the outdated equipment will be imposed by increased property tax. As a result, the companies would be incented to replace it with more advanced counterpart. This will lead to general modernization of the country.

On the one hand, the idea isn’t baseless, as many plants in our country are fit with the machinery produced many decades ago, i.e. in the Soviet period, that directly influence the quality and competitive ability of the released product, service and finished costs (under general expenses on maintenance works of outdated equipment).

In this regard, the Ministry of Finance proposes to reevaluate the equipment in the accounting report of the large and medium industrial, transport and telecommunication enterprises in accordance with their market price as of January 1, 2015.

Residual value of equipment in ownership, in rent (with the right of redemption) and on lease will be subject to adjustment. The changes will be included on determination of the tax base while calculating of the property tax.

This measure won’t affect small enterprises. Besides, new requirements won’t impose the equipment in the process of disposal.
However, owing to sanctions on the part of the Western countries which prohibit among other things the supply of the double-purpose equipment, continuing stagnation of the Russian economics, it would be difficult for Russian companies to carry out the governmental plan. If the program is adopted in legislation, it will with high probability lead to short-term perspective of production cost increase and decrease of enterprise profitability. As a result, there will be inevitable price increase, the dynamics of which doesn’t fall into bounds outlined for it by financial authorities.