Journal of Management Information and Decision Sciences (Print ISSN: 1524-7252; Online ISSN: 1532-5806)


Impact of hidden tax preferential regimes on an optimal investment project model in Russia (on the example of a German automobile company)

Author(s): Sidorova, E., Polezharova, L., Rezvantseva, P., Turishcheva, T., & Skryabin, O.

The object of the study is to analyze the impact of hidden preferential tax regimes in Russia on the choice of investment project models for foreign companies. The hypothesis is the need to improve tax mechanisms for attracting foreign investors to the development of existing Russian manufacturing enterprises, regardless of the region where they are located. Foreign and domestic views on methods and techniques of direct investment and “hidden” tax preferential regimes for investors were systematized and characterized with the system analysis and induction methods. Features of the Russian practice of tax support for corporate investments and special conditions of special economic zones, regional investment projects and special investment contracts were identified, summarized and disclosed. The dynamics of FDI inflows and outflows in Russia, as well as the dynamics of the number of organizations participating in preferential regimes over some years, were determined and graphically presented using economic and statistical methods. The models for the greenfield investments project and the acquisition of an existing enterprise in Russia with minimal tax expenses were proposed using the economic modeling method based on the data from a real German automobile company. The estimated indicators of the cost of sales, revenue from the sale of cars, profit before tax, profit tax, net profit from the project of the parent company and key indicators of the investment project were calculated using the methods of economic forecasting in the context of these two investment models. The method of comparative analysis was used to determine the optimal model of the investment project of a German company. As a result of the study, it was determined that Russian hidden preferential regimes provide a whole range of tax benefits if an investor meets a number of conditions. An access to the prevailing number of benefits is limited with the status of a Russian legal entity and is subject to registration in a certain territory of Russia. It was revealed that Russian regions have a significantly different list of investment tax benefits. It was also identified that the tax legislation of Russia encourages foreign investors to invest in the development and technical re-equipment of existing Russian manufacturing enterprises to a lesser extent. Tax benefits are mainly aimed at attracting foreign capital to create new enterprises in Russia on the territory of certain regions. It was concluded that the Greenfield project is optimal for reducing the investor's tax burden. For greater flexibility, in tax planning and sharing the economic risks of a foreign investor company, it is advisable to establish or to have a separate legal entity in Russia. The necessity of improving tax mechanisms for stimulating the inflow of foreign investments into the development of existing Russian manufacturing enterprises, regardless of their location, was substantiated. The research is practically significant for foreign companies as it provides systematic information and characteristics of the conditions of preferential tax regimes in Russia; it identifies the advantages and provides a methodology for determining the optimal investment technique in Russia.

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