Vladimir Putin's opening address:

Ladies and gentlemen,

Today, we will continue our work on next year's draft federal budget. Let's start with our top priority: tax policy guidelines. I think you will agree with me that we must consider this issue very thoroughly, weighing every step carefully. We must understand the medium- and long-term consequences of our decisions.

First of all, the tax service should perform its basic function, collecting taxes.

At the same time, it is necessary to consider the need for incentives for growth. Incentives for innovation and an innovation economy are extremely important for us right now. So we will assess once again how effective our previous decisions regarding privileges and preferences have been.

As we now understand very well, merely putting particular incentives in place does not suffice. We must also implement and manage these incentives effectively.

In practice, the tax service must set up the conditions so that law-abiding businesses are able to enjoy available preferences in full. It should help taxpayers make their payments correctly and on time instead of finding faults and prosecuting them for minor errors. Nevertheless, there should be some procedures.

The burden on payrolls will increase next year. This will certainly be the most acute problem in the near future. As you know, we have decided to increase mandatory social insurance payments. Otherwise, it would have been impossible to achieve financial stability in the pension system while raising the older generation's living standards at the same time.

However, we have put off a tax increase due to the economic crisis. This year premiums will remain frozen at 26%. We must find resources so we can increase the financial burden gradually over the course of next year.

Moreover, we have innovative businesses that even a small increase in taxes could force to cut back on development. We are willing to keep their premiums at 14%, which is practically what they pay now. We should also re-examine the official list of industries eligible for this privilege. On the whole, we should pay the most attention to high-tech industries, with their unique products.

Another challenge for the coming year is to continue to develop new amortisation mechanisms appropriate for the current economic situation.

Companies switching to new energy-saving equipment will be entitled to more incentives, and may even be exempted from property taxation for three years.

It is clear to all that these steps will free up significant resources for businesses to develop, and that the most active businesses in introducing cutting-edge technology will gain most.

We also have a system of patents for small businesses. The entrepreneurs who purchase patents at fixed prices will be free to do business with a minimal level of accounting standards and other administrative burdens and barriers.

This fiscal arrangement is the most convenient for business, and so deserves to be expanded.

Last but not least, educational, research, cultural and healthcare non-profit organisations should be exempted from the profit tax, which will give them considerably more leeway to do their jobs. And in future, we may transfer some budget-funded contracts to NGOs. Experience has proved that this measure encourages competition to provide public services and improves such services.

I ask the Finance Ministry to prepare relevant amendments to the Tax Code and submit them to the government.

Moreover, commercial educational and healthcare organisations should be exempted from the profit tax for eight years or longer.

Please prepare a relevant draft and also submit it to the government. I think this would be a fair arrangement that would improve public education and healthcare.

Another proposal is for profit tax exemptions on the sale of securities that are owned for five years or longer and are not traded in established markets.

We will discuss this, too. Now let us get down to our agenda.