The president has signed Law No. 209-V on June 12, 2014 for initiating a tax holiday for corporate investors in the industrial innovation’s field and it will be effective from January 1, 2015. According to the law, the tax authorities may grant a tax holiday upon a taxpayer’s request, given that the taxpayer submits required documents to the tax authorities. By approving the application, the taxpayer will enter into an investment agreement with the tax authorities that contains information on the implementation of the investment and on the tax incentives to be granted to the taxpayer. To be entitled to the tax holiday regime some conditions must be met.
In addition, the tax holiday regime provides losses incurred during the tax holiday period cannot be offset against profits derived after the expiry period and the statute of limitations period regarding taxes covered by the tax holiday is extended by 5 years following the tax holiday expired year. The following tax incentives are granted within the tax holiday regime:
- corporate income tax rate of 0% is granted for 11 years, beginning from the year in which the agreement was signed;
- a land tax rate of 0% applies to land plots used for the purposes of the investment project, starting from the first day of the month in which the agreement was signed and continues to the following 10 calendar years. The 0% rate will not apply to land plots rented out;
- a real state tax rate of 0% applies to fixed assets (i.e. immovable property except for land plots subject to land tax) used for the investment project. The 0% rate is granted starting from the first day of the month in which the assets are put into operation for the investment project and continues for the following 8 years. The rate does not use to assets rented out or put under a trust management;
- certain custom duties exemptions apply, e.g. on imported technical equipment.
