Stimulating innovation in Russia: Limitations and opportunities of tax policy

Abstract

The purpose of the study is to identify institutional and regulatory restrictions and the possibilities of using instruments of tax policy in Russia to stimulate innovative activity of enterprises. The article examines the importance of institutional constraints and factors of innovative development. The factor of international tax competition in the sphere of innovation is investigated, and the data of international trade in innovative services are analyzed. Based on the data of tax and statistical reports in Russia and data from the financial statements of the largest Russian companies, the analysis of the actual demand for key instruments of tax regulation of R&D in Russia has been carried out. It is concluded that there are shortcomings that do not allow to fully use the potential of existing measures on income tax to stimulate innovative activity. Among the main shortcomings we identify: the lack of focus, complex regulation and administration, a limited scope of the applied incentives to R&D on corporate income tax. This makes the current tax incentives inaccessible to a wide range of taxpayers and leads to an outflow of resources from Russia to foreign countries with better regulatory conditions.