Investment Stimulation by a Depreciation Mechanism

Vadim Arkin, Arkina Svetlana () and Alexander Slastnikov ()

EERC Working Paper Series from EERC Research Network, Russia and CIS

Abstract: The authors investigate the possibility of utilizing the depreciation mechanism to provide incentives for undertaking investment in the real sector of the Russian economy. The proposed model of investor's behavior under risk and uncertainty considers a wide range of tax instruments The authors derive the optimal timing rule for investment and depreciation policy which maximizes tax payments into the regional budget. A comparative analysis of the former and new profit taxation systems is carried out. The authors discover interdependence of tax holidays and accelerated depreciation, and study the replacement of property tax by real estate tax. They investigate the possibilities of compensating for risk by reducing profit tax rate and changing depreciation policy, and prove the existence of risk zones for which these fiscal mechanisms are non-effective.

Keywords: Russia; tax system; investment project; uncertainty and risk; depreciation; tax exemptions (search for similar items in EconPapers)
JEL-codes: C61 D81 E22 H3 H71 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2003-02-21
New Economics Papers: this item is included in nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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