Development of the radio-electronic industry in the kaleidoscope of tax incentives

Krokhmal Daniil Dmitrievich ORCID: 0000-0001-7801-9164 Student; Faculty of Taxes, Audit and Business Analysis; Financial University under the Government of the Russian Federation Russian Federation, Krasnodar Territory, Slavyansky District, Petrovskaya, 24 daniil.krohmal.dm@mail.ru Other publications by this author

Relevance. Problem statement

The trends of the modern world economy, the nature of international trade, the specifics of the formation of a new technological order, the global increase in labor productivity and the formation of new human needs dictate the need for the development of industrial production capable of ensuring economic growth in order to achieve the tasks set in a separate state. Increasing the output of high-value-added products, reducing unemployment and inflation, establishing socially equitable equivalent international exchange and, as a result, achieving macroeconomic long-term stability are the most important conditions for an optimal environment for the development of new technologies and making innovative discoveries.

Taking into account modern technological realities, one of the most important sectors of industry is the production of radio-electronic products. Radio electronics, in all its variety of devices and their individual elements, is aimed at transmitting, receiving and converting data using electromagnetic energy. Obviously, without the necessary volume of supply of such equipment, the fourth industrial revolution cannot fully take place in a conditional economic space, not to mention laying the foundation for the latest scientific research discoveries.

Taking into account the modern capitalist world order, which causes the high influence of international trade and the focus of financial and investment institutions on high profitability of projects, while at the same time taking into account the growing trends in the deglobalization of the world economy due to protectionist measures and sanctions pressure, it can be concluded that the development of the radioelectronic industry in a transitional economy is impossible without outside support.

The necessary level of support for the radio-electronic industry can only be achieved through a state policy of vertical stimulation. In economic theory, there are many types (options) of such incentives: from the issuance of government loans (most often loans remain commercial, but the difference between the preferential and market rates is covered by the state) on preferential terms (in some cases: irrevocable subsidies) before the regulatory regulation of legislation. The latter, among other things, includes one of the most popular and effective ways to support production in the modern financial system – tax incentives.

Tax incentives for the radio-electronic industry in the Russian Federation are a relatively new phenomenon. Nevertheless, in recent years, the need to support this industry has been reflected in many regulatory legal acts (as an example, Decree of the Government of the Russian Federation No. 328, No. 878; Orders of the Government of the Russian Federation No. 20-r, No. 1512-r, as well as many others). In 2022, significant additions were added to Article 284 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation), expanding the range of benefits. In many ways, this was a reaction to the global change of policy in the organization of Russian industry, which was marked by such normative legal acts as the Federal Law "On Industrial Policy in the Russian Federation", the Decree of the President of the Russian Federation "On the Fundamentals of State policy of the Russian Federation in the field of industrial safety for the period up to 2025 and beyond", etc.

Some of the measures presented have been in effect relatively recently, which is why it is not possible to fully assess their economic effect on the Russian economy (the second reason is the suspension of publication of information in open reporting forms in 2022, 2023). However, on the other hand, it is possible to track the impact of previously adopted support measures, as well as characterize the overall current state of the industry in the Russian Federation, which, among other things, will allow predicting the degree of qualitative changes in the radioelectronic industry after the introduction of new regulations.

Literature review

The issue of tax incentives for the radio-electronic industry has not lost its relevance in recent years, especially in the context of the specification of larger-scale research of the advanced industrial complex. Thus, R.A. Gereev in his monograph "Tax incentives for industrial production" ^[1] studied the theoretical and practical aspects of supporting the industrial sector from the point of view of the sectoral features of their functioning, developed a special methodology for calculating the tax burden for the objective provision of benefits, focused on greater openness of state support programs to assess the efficiency of the emergence of a positive effect in the industry. A team of authors, including Pinskaya M.R., Tikhonova A.V., Khavanova I.A. in their monograph "Tax incentives for the development of Russian industry under sanctions restrictions" ^[2] conducted a broad analysis of the impact of various tax mechanisms in Russia on the industrial complex. In particular, a large-scale systematization of the Russian and foreign experience of tax incentives for the industrial sector was carried out, institutional and legal factors hindering the development of the industry were identified and a list of proposals for developing an improvement strategy was formed. Some scientists, including Bakhshyan E.A. ^[3], Komleva M.I. ^[4], Malkova Yu.V. ^[5], Mokrousov A.S. ^[6], Tikhonova A.V. ^[7], Batrukova N.M. ^[8], Gereev R.A. ^[9], Melnikova N.P.^[10], Estafyeva Yu.V. ^[11] in their research, they studied the methodology and problems of the formation of industrial clusters on the territory of the Russian Federation in the context of the features and disadvantages of zones with preferential tax regimes, which is extremely important for the radioelectronic industry, due to the involvement of products in large industrial production chains. The works of foreign authors in this aspect are noteworthy. For example, Newman C. ^[12] investigated the specifics of creating industrial clusters on the African continent, and the work of Corchuelo M. B. Martínez-Ros E. ^[13] seems particularly interesting in terms of the applicability of tax incentives related to innovations in radioelectronic production. In addition, Sebastian J. ^[14], Jin Yang and Chuanli Zhou ^[15] made a special contribution to the development of the topic. It should be noted that despite such a wide range of highly researched studies, the topic of eliminating existing barriers to stimulating the radioelectronic industry in the Russian Federation remains relevant.

The research methods used in the work are: general scientific (deduction, induction, description, analysis, synthesis, generalization); private (comparison, analysis of dynamic series, structural analysis, correlation and regression analysis, situational analysis, method of analogies, scientific abstraction).

The current state of the Russian radio-electronic industry

To characterize the current state of the analyzed industry, we present the dynamics of the main macroeconomic indicators of the radioelectronic industry (Table 1).

Table 1 – The main macroeconomic indicators of the radioelectronic industry in the Russian Federation (compiled by the author according to Rosstat ^[16], the Federal Tax Service of Russia ^[17], the Federal Customs Service of Russia ^[18])

1. The contribution of radio electronics to the Russian economy. The share of the radio-electronic industry in the GDP of the Russian Federation is 0.9% (if calculated at comparable prices). About 3% of the employed population works at radioelectronic production enterprises. In addition, it is important to take into account that 90.43% of radio-electronic products of own production (which is absolutely prevalent starting from 2022) are not exported, that is, consumed on the domestic market. The main consumers of radio electronics are such industries as mechanical engineering (including heavy, machine tool construction, etc.), individual manufacturing industries of final, intermediate and investment demand, which in turn have a strong impact on ensuring the operation of the extractive sector, construction, trade, agriculture, etc. Thus, only direct consumers of radio-electronic products provide at least 40% of Russian GDP, the production of which involves, by lesser standards, a third of the country's employed population. Taking into account the fact that imports have become more complicated since 2022 (the share of imported radio electronics among Russian consumers is decreasing by more than 10% in 2022) due to a decrease in the national currency, sanctions pressure, and increased logistics costs, it can be concluded that domestic production of radio electronic products has a significant (and even key) impact on the Russian economy Federation.

2. The composition of the subjects of the industry. According to 2019 data, only 1.81% of radio-electronic organizations in the Russian market operated with the participation of foreign capital, but at the same time they produced 22% of all industry profits. Thus, on average, organizations with foreign participation brought in 15 times more profit. This fact in itself does not mean anything, as it may indicate both more efficient management of the company and various capital withdrawal schemes. Nevertheless, none of the reasons for such an imbalance can be considered favorable for the development of the industry.

3. Production and economic efficiency. The industrial production index of radioelectronic products has shown minimal growth over the past five years, but this was largely due to government support and the implementation of investment programs. Even in the crisis year 2020 for the entire industrial sector, the production of radio electronics in terms of electrical equipment decreased by only 0.8% compared to 2019, and even increased by 3.4% for computers and optical products. The first quarter of 2022 also hit the industry, but at the same time, radio electronics returned to normal by the middle of the year. Note that despite a slight increase in production volumes, the profitability of the sub-sector remains one of the lowest (especially in terms of return on assets). In addition, the number of enterprises has decreased significantly over the past five years (including due to reorganization, bankruptcy and a change in the type of economic activity). Since 2017, manufacturers of computers, electronic and optical products have decreased by 21.1%, and manufacturers of electrical equipment by 13.66%. At the same time, these figures are based on data from 2021, that is, they do not take into account the outflow of foreign capital from the Russian economy in 2022. It should also be noted that the reduction in the number of manufacturers did not have a negative effect on the industrial production index, which indicates a gradual monopolization of the industry.

4. Investments in the industry. Over the past two years, investments in fixed assets of the radioelectronic industry have increased by 34.6%, reaching the figures of 2019. As noted above, the high resistance and stability of the industry sector under study does not at all indicate its confident position in the economy. Rather, on the contrary, taking into account the actions of such government programs as "Development of the electronic and radioelectronic industry", "Development of the electronic component base and radioelectronics", etc., which provide the industry with enormous subsidies, the radioelectronic industry sector cannot achieve the targets. The crisis of 2020 somewhat restructured government spending, but at the beginning of 2023, the Government allocated 7.5 billion rubles for the implementation of one of the programs for the development of radio electronics, due to which the deadlines for obtaining preferential loans for industry organizations will be extended (Decree of the Government of the Russian Federation No. 127 of January 30, 2023). Of course, this is not the only financial aid package. According to the approved budget projects, radio electronics in the period 2023-2025 should receive subsidies totaling 111 billion rubles (however, a significant percentage of this amount will be transferred to the banking sector for further implementation of concessional lending programs). At the same time, it is important to keep in mind that the volume of private investment in the radioelectronic industry is extremely insignificant. If we calculate the share of private investments of any form in the radioelectronic industry relative to total investments in the industrial sector of Russia, we can find that in recent years it has been from 0.5% to 0.7% (and this is without taking into account investments in such extremely profitable economic spheres as the financial sector, trade, etc.). At the same time, the index of the physical volume of investments shows significant fluctuations annually, which characterizes the instability of the cash flow, reflects its dependence on specific large investors (for example, the state).

At the same time, the radio electronics industry needs additional investments to upgrade production facilities. According to Rosstat, in 2022, the share of worn-out fixed assets in terms of machinery and equipment amounted to almost 60%. Even despite the fact that positive trends have been observed in this aspect over the past 3 years, this value is extremely high, indicating the obsolescence of equipment, machine tools, machines necessary for the development of domestic production of electronic products. Similar conclusions can be drawn from data on the commissioning of new fixed assets in the studied sector of the economy.

Thus, the current state of the radio-electronic industry does not meet the demands of the time, cannot provide a basis for the formation of a "new economic miracle". The reason is banal, but indicative – under a capitalist economic system, in a functioning market economy, the fundamental law is goal–setting based on profit. Any private economic entity evaluates an investment project in terms of its profitability (taking into account the time factor, risk, etc.). In the 1990s, Russia entered the global division of labor system as a supplier of cheap (which is provided by a rather "weak" ruble) energy resources. At that time, the opinion was particularly popular that by selling oil, gas and other minerals, the Russian state would be able to secure almost any import. However, after 30 years, it turned out that the creation of self-sufficient domestic industrial production is one of the most important conditions for technological and economic (that is, essentially political) sovereignty. The Russian state currently spends huge resources to maintain domestic production, but private individuals, owners of large (sometimes comparable to the budgets of some countries) capital is reluctantly invested in the development of Russian radio electronics. Instead, ways of redirecting import flows are particularly popular (forced increase in the cost of imports when imported through a third country or a fundamental change of supplier). The business of selling energy resources (as well as basic products of the chemical and metallurgical industries with a low degree of conversion) has minimal risk, is highly profitable and low competitive, and most importantly – time-tested, so it "absorbs" all available investments. Investors are ready to build a new oil pipeline, develop trade with Asia through the ports of the Far East and take any measures to maintain their usual line of business. To invest significant capital (although, note that the 10 richest people in Russia have a total capital approximately equal to the market capitalization of Asus; in other words, this money would be enough to cover an amount five times higher than all government spending on the national economy in 2023 or to ensure an increase in current subsidies to the radioelectronic industry by 10 times for the following 50 years ahead) in an industry that is backward from the point of view of the advanced world level, trying to compete with famous American, Chinese, South Korean companies, and suffering losses for years and decades, both large and medium-sized Russian businesses are not ready.

It seems reasonable that for the development of Russian radio electronics within the framework of the capitalist economic system, it is necessary to use a state regulator that would use all the tools available to it to eliminate the scheme of the Russian investment field, which can be briefly described as a refusal to invest in domestic production in favor of cheap imports of necessary products. This policy should be implemented in a set of measures: for example, high import duties are extremely important for it, which contradicts most existing trade agreements. Of course, it should be noted that such a strategy at the initial stage can cause a recession in certain sectors of the Russian economy due to a sharp increase in the cost of imports: the profitability of some industries will noticeably decrease, which will increase prices for a number of commodity nomenclature (however, for critically important it is necessary to allow exceptions from duties), unemployment will increase. However, there is no other way to eliminate the existing imbalances in the development of the Russian economy within the framework of the capitalist economic system. It is necessary, firstly, to create an environment of high domestic demand for radio electronics, and, secondly, to "grow" radio-electronic enterprises by providing them with high subsidies, preferential loans and tax incentives.

Within the framework of this study, we will consider the issue of creating an effective tax incentive system for radio-electronic enterprises in more detail.

Instruments of tax incentives for the development of the radio-electronic industry and the problems of their application

At this stage, the Russian tax system has vertical tax incentives designed to support domestic manufacturers of electronic products: reduced corporate income tax rates (clause 1.16 of Article 284 of the Tax Code of the Russian Federation); an increasing coefficient to the initial cost of fixed assets (clause 1 of Article 257 of the Tax Code of the Russian Federation); a special coefficient 3 to the depreciation rate of fixed assets (Clause 5, clause 2 of Article 259.3 of the Tax Code of the Russian Federation); an additional component of the investment tax deduction (clause 7, clause 2 of Article 286.1 of the Tax Code of the Russian Federation); reduced tariffs for mandatory insurance premiums (clauses 18, clause 1, clause 2 of Article 427 of the Tax Code of the Russian Federation). Most of these incentives have been introduced quite recently, however, it is important to mention some problems with the application of the presented norms (for example, the benefits provided for in paragraph 1.16 of Article 284 of the Tax Code of the Russian Federation, as well as the incentives provided for in paragraph 18 of paragraph 1 of Article 427 of the Tax Code of the Russian Federation, since the conditions for their application are essentially similar). According to the results of the first three quarters of 2022, only 45 organizations (note: 18 of which are registered in Moscow and 7 in St. Petersburg) were able to confirm compliance with the established criteria (inclusion in the register of the Ministry of Industry and Trade; at least 70% of income from established sources, etc.). This is approximately 67 times less than information technology organizations applying the appropriate preferential rate for NGOs over the same period. Of course, the radioelectronic industry is represented in principle by a smaller number of organizations, however, taking into account the above, it seems logical that the criteria currently established are too strict, and it is difficult for radio electronics manufacturers to comply with them (the situation, moreover, is aggravated by the tax risk of additional charges, since, according to paragraph 1.16 of Article 284 of the Tax Code of the Russian Federation, in the case of if an organization ceases to meet at least one of the criteria, it will lose the right to a benefit for the entire tax period). In particular, for many organizations, this preference is risky because of the income criterion. In addition to the standard problems of this type of incentive, identified at the dawn of its appearance in calculating the share of profits from agricultural activities (such as, for example, the sale of fixed assets, the need for separate accounting, etc.), it is important to take into account that the presented list of income included in the share of 70% is fundamentally incomplete. The formulations reflected in the Tax Code of the Russian Federation do not take into account production specifics, including the combination of individual elements of the electronic (radioelectronic) industry, as a result of which many taxpayers do not apply this benefit due to high financial risks and regularly contact the Ministry of Finance of the Russian Federation for explanations regarding certain production technologies. However, the Ministry of Finance is not authorized to give such terminological explanations, so it sends taxpayers to the Ministry of Industry and Trade, which, as a rule, redirects the request to the Federal State Budgetary Institution "All-Russian Scientific Research Institute of Radioelectronics", whose expert opinion can be formed over a long period of time. Given that this benefit was initially considered temporary (until 12/31/2024), these nuances significantly reduce its overall effectiveness.

In addition, there are a number of questions about the wording prescribed in the Tax Code of the Russian Federation "... products produced on the basis of own developments ...". The fact is that modern legislation does not provide for any clear criteria for such products, nor forms of supporting documentation (for example, whether products produced on the basis of their own developments are considered if such developments were partially designed by a third-party organization on order, etc.). The positions of the explanatory bodies vary in their conclusions. So, in the Letter of the Ministry of Finance dated 17.01.2023 No. 03-03-06/1/2472 The position is declared that its own development is carried out directly by the taxpayer himself, therefore it can be confirmed by any internal documents of the organization that are suitable for logical content. In a Letter dated 06.12.2022 No. 03-15-06/119337, the Ministry of Finance explains that its own development is confirmed by Rospatent documents.

Note that even those few organizations of the radio-electronic industry that were able to meet the criteria in 2022 pay NGOs to the federal budget at a standard rate of 3%, although, for example, the same organizations in the field of information technology/agriculture pay it at a rate of 0%. At the same time, based on the information in the Report on the tax base and the structure of accruals for corporate income tax 5-P, the amount of shortfall in the regional budget due to the application of a reduced rate for the radioelectronic industry amounted to 1,775,726 thousand rubles. (the amount of shortfall in the federal budget in the case of applying the 0% rate would amount to 313,363 thousand rubles.). For comparison, the 0% tax rate for agricultural organizations costs the federal budget 45 times more expensive.

In addition, it should be noted that this tax benefit is practically impossible to apply for organizations that operate in the field of radioelectronic industry on a secondary basis (as an intermediate production stage). For example, enterprises in the automotive industry may be engaged in developments in the field of radio electronics for technological equipment of cars, but they will never be able to meet the criterion of 70% of income. This leads to a logical contradiction, since, in fact, the contribution to the economic development of the state from such organizations is commensurate, while the automotive industry itself is extremely unprofitable and requires support from the industry. Nevertheless, enterprises in the automotive industry (and some other industries) are deprived of the opportunity to apply this benefit. Perhaps, during the initial development of tax incentives, it was assumed that such organizations should form radio-electronic subsidiaries from their radio-electronic departments. This is evidenced, for example, by the following wording of the Tax Code of the Russian Federation: "... at least 70% are revenues from the sale by an organization of an electronic component base (electronic modules) produced on the basis of its own developments or those of a person belonging to the same group of persons with this organization ...". However, in modern realities, when the topic of business fragmentation and violations of the legislation on taxes and fees of Article 54.1 of the Tax Code of the Russian Federation is almost the main information agenda in the issue of tax litigation with multi-million additional charges, taxpayers intend to act extremely carefully in all matters related to business division, which ultimately reduces the effectiveness of the application this tax incentive.

Earlier, we repeatedly focused on the fact that Russian radio electronics is becoming more and more monopolized every year (which is normal according to the basic law of capital). This can be tracked, including by examining the impact of taxes on the financial performance of industrial enterprises. To do this, let's compare the indicators of the tax burden and data on the profitability of industrial organizations based on information published annually by the Federal Tax Service of Russia in the Appendix to the Order of the Federal Tax Service of Russia dated 30.05.2007 N MM-3-06/333@ (expand the sample for representativeness to 10 years). As a result, the analysis showed that the correlation between the profitability of goods sold and the tax burden for enterprises of the electronic industry is (0.978), which indicates a strong direct relationship between the indicators. Such a situation can be explained by the scale effect of production against the background of the introduction of a package of tax benefits. In particular, the larger the organization (up to the equality of marginal costs and marginal income), the more efficient production methods are available to it, which in turn contributes to the growth of both profitability and tax burden at the same time (given that the industry in the Russian Federation is monopolized). At the same time, tax benefits (for example, in terms of a reduced rate for NGOs) have an extremely limited range of beneficiaries due to criteria that are quite difficult to meet (as we pointed out earlier). This incentive is mainly applied by small businesses that are not engaged in large-scale mass production of products, but in scientific development and small local orders. As a result, small enterprises reduce their tax burden and increase profitability, but this effect is completely offset by an increase in profitability against the background of an increase in production scale. Thus, a quite natural question is brewing about the goal setting of vertical tax incentives for industry. It's a matter of priority. Small business support is a task regulated by separate regulatory legal acts, national projects and regulations. A completely different package of benefits is provided for it, its own concept of application has been developed, a separate line of budget expenditures is provided, which is only indirectly related to supporting the competitiveness of the national economy in world markets. Thus, the fact that the studied tax benefits are applicable for the most part to small businesses in the radioelectronic industry comes into logical contradiction with the tasks set by the Russian Government.

Improving the mechanisms of tax incentives for the radio-electronic industry: general approaches to achieving economic efficiency

The reformation of any object is recognized as successful only if the specific tasks assigned to it are fulfilled (or at least an intermediate result is achieved). Thus, it is possible to build a concept for improving tax incentives for the radioelectronic industry only after the formation of a set of expected economic effects, the achievement of which will be ensured by new tax incentives. A good example of this judgment is the concept of state support for certain indicators of industry sensitivity, when areas of stimulation are highlighted (for example, stimulating the growth of the use of innovations in production), indicators of assessing industry sensitivity are noted (for example, internal R&D costs) and specific tax incentives are worked out (for example, an investment tax deduction for the amount of R&D costs). Further, with the help of statistical analysis, a study is conducted on how a specific tax incentive influenced a specific indicator, which will contain a fair economic effect in this area of stimulation (at least a certain clarity will arise: whether further attempts to develop this tax incentive make sense).

However, it is worth recognizing that such a method of evaluating the effectiveness of tax incentives for the radioelectronic industry is still not applicable. There are two problems. The first is the need for a wide range of detailed statistical data (many of which have not been published since the beginning of 2022). The second is an unrepresentative sample (not enough time has passed since the introduction of benefits for radio electronics). That is, we can analyze the tax reports and conclude that the introduction of a reduced rate for NGOs allowed radio-electronic enterprises to reduce their tax liabilities by 8.976 billion rubles in total for 2022. This is certainly positive, but in order to draw a conclusion about how this "tax savings" were spent, a wide range of other data is needed that would allow us to correlate indicators in order to identify the effectiveness of the current nature of incentives (for example, by 2021, it can be noted that investments in machinery and equipment during reconstruction and modernization they increased by more than 40%, and already in 2022 they decreased by more than 30%. In order to analyze the causes of such fluctuations and assess the impact of external effects, it is necessary to expand the sample and additional information). Anyway, the situation where "tax savings" simply increased the net profits of some companies, slightly improving their investment background (in the context of an unprecedented decline in the activity of the Russian stock market in 2022) cannot be unequivocally rejected. Based on the above, we will form a set of proposals to improve tax incentives for the radioelectronic industry on a different principle. We will focus on the current procedure for granting benefits to NGOs, while making the necessary adjustments to eliminate the main problems with its application.

In this context, it is proposed to consider two concepts for improving tax incentives for radio-electronic enterprises: "within the framework of the current maneuver" and "according to a separate tax base". The first concept is designed to eliminate the shortcomings of the current model of stimulating radio-electronic enterprises, the second, in turn, is aimed at expanding the benefits beyond the "radio-electronic enterprise" towards "radio-electronic production".

Improving the mechanism of tax incentives for the radio-electronic industry within the framework of the current maneuver

It is advisable to supplement the relevant provisions of clause 1.16 of Article 284 of the Tax Code of the Russian Federation in terms of clarifying the concept of "own products (own developed products)" and types of supporting documentation (also by analogy with insurance premiums). At the same time, it seems optimal to consolidate "non-strict reporting forms" (that is, internal documents of the organization), as well as permission to use third-party services to a certain extent when developing its own products. This will not narrow the scope of the tax benefit, but it will provide additional clarity in terms of its application (reduce the taxpayer's risks of additional tax charges). We note the sufficient limitation of the list of radio-electronic products for the purposes of applying reduced corporate income tax rates and insurance premium rates (Decree of the Government of the Russian Federation dated 07/22/2022 No. 1310). This list is involved in the following aspects: the implementation of services for the design, development and production, as well as repair and maintenance of radio-electronic (electronic) products, and does not include a huge layer of radio-electronic equipment. At the same time, the implementation of electronic component databases based on their own developments and the transfer of exclusive intellectual rights to relevant intangible assets are taken into account outside the list.

Let's return to the part of the tax incentive that is linked to the list. Taking into account other criteria for the application of this benefit (inclusion in the register, which provides for localized production; the criterion of 70% by income), the list seems too strict and cannot fully ensure the growth of industrial production of radioelectronic products (in previous parts of the study, statistics on the unpopularity of the use of the incentive were provided). The largest enterprises of the country's radio-electronic industry produce a wide range of radio-electronic products, the product range of which goes far beyond the few positions to which the benefit applies, which makes it impossible to use the incentive. For example, the design, development and production of such equipment as any electronic components, printed circuit boards (with the exception of cards with integrated circuits), monitors and projectors, most of the components for navigation equipment, etc. are not taken into account. As a result, enterprises must abandon either the application of benefits or the production of products not from the list. Another alternative is to divide the business (which is sometimes complicated by additional factors and always involves additional risks). All three situations have their negative effect (the refusal of the benefit does not correspond to the purpose of its introduction, the refusal to produce products not from the list may provoke a reduction in its supply on the market, the specifics of the "division of business" for the application of tax benefits were reflected earlier). Thus, the elimination of the existing disadvantages of the incentive can be done in several ways. We present them in Table 1, highlighting the positive and negative economic effects.

Table 2 - Possible ways to improve the mechanisms of tax incentives for radioelectronic production in the Russian Federation (compiled by the author)

Although some of these proposals appear to be sufficiently justified and subject to consideration, in general they also have tangible disadvantages. Especially considering the record deficit faced by the consolidated budget of the Russian Federation at the beginning of 2023, in connection with which we will consider another concept for improving tax incentives for the radioelectronic industry.

Improving the mechanism of tax incentives for the radio-electronic industry according to a separate tax base

The regulation of the legal division of business seems to be a measure that does not quite fit into the logic of Russian legislation and, moreover, tax control. Too much effort was directed at one time to combat this phenomenon to now suggest that organizations use such a method of stimulation if there is a possible alternative. The alternative is to allow the use of this tax benefit by organizations with any income by composition (in fact, to eliminate the income criterion), which, among other things, will allow it to be used by enterprises investing resources in the development of domestic radio electronics, but with a different type of main economic activity. Radioelectronic products are actively used by enterprises of the automotive, machine tool, aviation and other industries in the format of a separate production sub-process. Some enterprises order radio-electronic products from specialized organizations, but some produce them independently. To support them, it is sufficient at the legislative level to establish separate rules for the application of tax benefits for such organizations. Here are possible options for fixing the tax incentive in legislation (Table 2).

Table 3 - Options for tax incentives for the radioelectronic industry according to a separate tax base (compiled by the author)

Thus, several options are presented for reforming the current procedure for granting tax benefits to organizations of the radio-electronic industry. Thus, a benefit with a "broad incentive character" can significantly increase the number of taxpayers who will be able to at least partially reduce their tax burden, but, on the other hand, the targeted nature of the incentive is lost and the shortfall in budget revenues increases excessively. In this context, the most interesting options are the "narrow nature of incentives" and the "operation- and industry-balanced nature of incentives", which can have a certain effect on the tax burden of radio-electronic organizations, while not reducing budget tax revenues too much.

It is worth noting that the methodological value of this proposal does not lie at all in the specifically presented versions of table 2. It is possible to weigh, add and restructure various criteria indefinitely, but the main positive effect of any reform to improve tax incentives by dividing tax bases will be that a real opportunity will open up for many electronic organizations to apply the benefit (let this benefit not reduce the tax burden too much, but the risk of additional tax charges will be leveled for enterprises (penalties, fines) if their qualified income for the tax period amounted to, for example, 69.7% instead of 70). The proposed concept is definitely more flexible, favorable for the vast majority of taxpayers, and also increases the room for maneuver for industrial organizations in other industries (many of which need government incentives no less than radio electronics).

Conclusions and prospects for improvement

The radio-electronic industry of the Russian Federation needs to increase government incentives. The study showed that the previously introduced tax incentives are not able to have a decisive impact on the industry and cause the economic growth necessary for its rapid development. The scope of their application is too limited by falling budget revenues, the impact of which on the budget can lead to serious imbalances in the Russian economy. That is why the proposed measures should not be considered in isolation. The state of the industrial sector in the Russian Federation determines the solution of accumulated problems and contradictions only through a complete reformation of the economic system: either by building a planned system of state planning and production, or by applying the most advanced methods of development of the capitalist economy. The second option provides for following the course of the "developmentalist" tradition (the work of Gunnar Myrdal, Albert Hirschman and their followers), namely, protecting national industry through protectionist policies, stimulating not only individual industries, but also well-established inter-sectoral industrial associations (which in the economic literature are commonly called industrial clusters), and, what is not less important is active investment in the social environment (education, research, etc.).

Of course, the development policy described above requires huge financial resources, which, in conditions of a colossal state budget deficit, require a special approach to determining the source (for example, in 2023, an emergency taxation mechanism was introduced to impose excess profits on the largest Russian companies). It is noteworthy that, subject to all the relief provided for by the emergency tax, namely, taxation of only the difference in profits at a relatively low rate with the possibility of applying a 50% deduction, the state budget of the Russian Federation will receive an additional 50 billion rubles only from companies such as PJSC Sberbank, PJSC MMC Norilsk Nickel and NLMK. This corresponds to the amount that the state subsidizes radio electronics for 2 years. Thus, it is best to look for the necessary resources for the reformation of Russian industry in the most profitable sectors of the domestic economy (increasing the tax burden on export revenues of the extractive sector, trade and financial organizations, etc.).