Paper/Speech Details of Conference Program for the 25th NISPAcee Annual Conference Program Overview V. Public Finance and Management Author(s) Vladimir Tyutyuryukov I do not belong to any Institution Belgrade Serbia Title Tax Mechanisms and Sustainable Development of EAEU Member States File Paper files are available only for conference participants, please login first. Presenter Vladimir Tyutyuryukov Abstract Introduction UNCTAD in its latest Trade and Development Report (2016) stated that the real investments have been receding in developed countries since 1980-s (despite rise of corporate profits), and since 2010 the foreign investors are withdrawing from the developing markets of “transition economies” (post-USSR countries). These trends directly affect the Member States of Eurasian Economic Union (EAEU). In other words, while recent EAEU Member States policies aimed, among other things, at attraction of foreign direct investments (FDI), re-industrialization and development of hi-tech industries, it is reasonable to consider the internal investment potential. The certain tax measures may become the instruments to encourage such internal real investments, especially considering two facts: that EAEU Member States aim at development of non-resource industries and domestic infrastructure and that their fixed assets are steadily becoming obsolete. Rosstat, a Russian statistical agency, openly reports that 14.9% of business fixed assets in use are fully depreciated (that is, in the normal course of operation they must have been replaced). For other countries, only expert estimates are available. In Kazakhstan, it is reported that about 12% of machinery and equipment underwent total wear and tear by 2003, and this share increased to 30% by 2008. In Belarus, by 2009 the accumulated depreciation amounted to 70% to 80% of the fixed assets value (in scientific sector it was 83% by 2004). Such obsoleting of the fixed assets renders hard (if possible) the re-industrialization of Russia and Kazakhstan (as planned in 2011 by State Council of Russia and by Strategy Kazakhstan-2050, respectively), as well as efficient use of technical and innovation potential of Belarus (as planned in 2004 by National strategy till 2020). The tax measures encouraging real investment may include tax credits for investment spending, faster depreciation for tax purposes, increased burden for older machinery etc. While such measures probably mean reduced budget revenues in short-term, the sustainable increase of value added by the industries working with the newer equipment and respective growth of budgetary revenues in the long-term should outweigh the current losses. The objective or research question This research intends to determine and analyze the benefits and disadvantages of existing tax measures designed to stimulate the renewal of the fixed assets or otherwise stimulate the implementation of innovations. Also the author will try to find the measurable estimation of the effect of such measures for both budget and industry based on open data. Methodology (research design) Methodology of this research includes two main steps. First, there is an analysis of tax law provisions in respect of the stimulation of real investments (with primary focus on implementation of new technologies, introduction of modern equipment and other steps for re-industrialization). Second step is the analysis of empirical statistics on dynamics of industrial output before and after implementation of the above tax instruments, as well as other relevant statistical data, which may help to estimate the effect of such measures.
