Evaluation of the Effectiveness of Investment Tax Incentives in Russia

Abstract

Investment is one of the most important factors determining economic fluctuations in the short term and economic growth in the long term. For this reason, governments in many countries have long been engaged in developing policies aimed at increasing business investment activity, with investment tax incentives being one of the main tools used. Russia currently has many investment-oriented tax incentives, which creates a special need for a comprehensive assessment of their effectiveness. The aim of the study is to develop and test a methodology for assessing the effectiveness of investment tax incentives, with the help of which it is possible to determine whether the benefit brings a positive effect both for the beneficiary and for the state. The hypothesis of the study is that the evaluation of the effectiveness of investment tax incentives can be carried out based on financial and economic data about the company. In this study, we searched for examples of evaluating the effectiveness of investment tax incentives in the context of each company that is the beneficiary of the incentive in the works of foreign scientists and at the state level. It is concluded that in most countries with a high level of assessment of the effectiveness of tax expenditures, such methods are not used. As a result of the study, a methodology for assessing the effectiveness of investment tax incentives was proposed and tested, which involves an analysis of the application of incentives by operating organizations. The methodology focuses on indicators of financial and economic analysis; the assessment is carried out based on indicators determined at the level of the beneficiary and characterizing the effectiveness of the use of these benefits both for the state (fiscal efficiency) and for the taxpayer (economic efficiency). The value of the study is determined by the proposals to improve the analytical system “Effectiveness of Benefits”, already launched in 2022, which is unlike any other in the world. The results of the work are of interest to government agencies and non-profit organizations to diagnose the effect of the use of benefits.