The State Duma has approved an extension to the zero income tax regime for agricultural producers for an unlimited period of time, Vedomosti reports . To recap, the income tax rate was previously set to go up to 18% from 2016 and to 20% from 2020. The decision is an additional measure to support domestic producers in the WTO environment.
The development is positive for Cherkizovo and Rusagro, with the key beneficiaries being the agriculture and meat producing segments. As we have not yet factored an extension of the favourable tax regime into our models, we highlight an upside risk to our financial forecasts for Cherkizovo. The tax amendment is also favourable for sentiment, highlighting the state’s commitment to shield the interests of the domestic agro industry.
Ivan Kushch, Maria Kolbina, Nikolay Kovalev, Zlata Kryvichkina
VTB Capital analyst
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