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President Putin: Good afternoon, dear colleagues,

As you know, a Russian-U.S. summit just took place last week at which we signed documents confirming the high level of Russian-American relations and setting the agenda for our work together over the near and medium term. The talks took place at a very high level and in a very trusting spirit, and I am sure that this is a good step forward for the development of our relations with the United States.

Now let’s get back to our current business. Here with us today is Leonid Reiman, who is working on the issue of technology parks that we discussed at the meeting in Novosibirsk some time ago. Leonid Dodozhonovich, could you please tell us how work is progressing on carrying out the plans that we made.

Leonid Reiman: In accordance with the instructions you gave following the meeting in Novosibirsk in January, Mikhail Yefimovich [Prime Minister Fradkov] drew up the corresponding instructions and work is now going ahead in a number of areas, including on creating the legal basis for supporting the information technology sector. We worked together with the Economic Development and Trade Ministry and with [Economic Development and Trade Minister] German Gref to draft a law on special economic zones, and this law has been put through considerable examination and has now been worked through quite thoroughly. At the same time, I would like to point out that, though this law goes a long way in providing support for companies’ production and development activities, there are still some particular problems with IT companies.

Here, the first slide shows the law’s main provisions, the models it applies and the issues concerning IT companies that it does not resolve in full. The second slide shows two models proposed in the law – one for an industrial-production zone, and one for a technology incubation zone. An industrial-production zone implies the presence of considerable production resources on the territory concerned while the main resources and parts are being imported from abroad. Technology incubation zones, meanwhile, are zones where new industrial technologies are developed and this requires simplified procedures for bringing models and samples into the zone. These zones work well for companies involved in science intense production and that have high research and development costs.

But IT companies involved in producing and exporting software and software services still face and present a whole number of problems. One of the particularities of these kinds of companies is that they employ a lot of people and so what they need is for payroll costs to go down. We spoke about this during the meeting in Novosibirsk and you gave the according instructions to develop a support system. Work is now underway on this.

The specific problem involving these companies is that it is difficult to provide confirmation of their IT products exports and services and to define their value, including for taxation purposes. What happens very often today is that the products and services these companies develop are transferred abroad via the Internet or through other virtual channels and it can be quite difficult at times to provide confirmation that exports took place.

Another specific feature of these companies is that their employees are scattered around the country, sometimes working from home, sometimes working from various offices. It is important to find some way of creating the conditions that would enable these employees to all come together, but at the same time, these companies are characterised by the fact that their production activities are not all concentrated in one place and it is impossible to account for everyone involved in the production process.

Next, we have studied world experience in this area and have come to the conclusion that there are two types of special regime: territorial-based support and sector-based support. We believe that sector-based support – support targeting the sector – is the option that will best allow us meet our development objectives for the Russian IT sector. The key principle here is the provision of benefits to companies involved in producing software and services. A similar approach has been used in countries such as Ireland, Israel and Taiwan and has had very positive results. Ireland, for example, has made real break through in the IT sector over the last seven years, even though special economic zones in the classic sense of the term were not established there. What they did instead was create a system of support for companies working in this particular sector.

Finally, we are proposing five measures that could provide support for companies in the sector. First, we want to introduce a system of accreditation for IT companies using self-regulating organisations. Under this system, a company wanting to benefit from the support system for IT companies would apply to the authorised body for accreditation.

The next step would be to establish simplified tax procedures for the accredited IT companies. This would have to be a system that would make taxation much simpler for them and would give them an incentive to actually pay their taxes and not come up with complicated tax evasion schemes.

The next step is to make an exhaustive list of documents that can be used to confirm IT exports, a list that would be approved by all the companies themselves and by the Justice Ministry. We have held consultations and have concluded that the current regime can and should be simplified, and this would be a factor contributing to raising effectiveness.

We should also look at setting quotas for IT specialists as part of our migration policy. A good many countries, including the United States, European countries and India, make attracting highly qualified programmers part of their migration policy.

Finally, we plan this year to begin implementing the state programme to create IT technology parks. We think that it is perfectly realistic to implement this project this year.

Vladimir Putin: Let’s agree then that the draft law on technology parks will be examined at the next government meeting and will then be introduced immediately to the parliament. Thank you.