System of preferences for the Russian Arctic zone investors to start by August 2020

The matter of holding preparatory work to launch the system of preferences for the investors in the Arctic zone of the Russian Federation turned out to be the key issue during the meeting of the State Commission for the Development of the Russian Arctic held by Mr Yury Trutnev, the Deputy Chairman of the Russian Government and the Plenipotentiary Representative of the Russian President in the Russian Far East Federal Area.

A package of draft laws on the system of preferences, which has a clear anti-crisis nature, is prepared for the second reading at the State Duma of the Russian Federation. Following the adoption, the period of entry into force will be reduced from 90 to 45 days. Thus, the system of preferences is planned to be operational in the end of July – beginning of August of this year.

Mr Alexander Krutikov, the Deputy Minister for the Development of the Russian Far East and Arctic, noted that to start preferences working in time, a number of tasks has to be solved. Among them – the adoption of regional and municipal parts of the system of preferences. In his view, all specific proposals in carrying out the provision of profit/property/land tax concession as well as simplified taxation system must be encouraged.

"Herewith, as the best practices we consider proposals received from the Arkhangelsk Region and the Komi Republic, which propose to establish regional local aids not for periods of 5–10 years, but for the entire duration of the implementation of the investment project", underlined Mr Krutikov.

Moreover, a series of resolutions of the Government of the Russian Federation and legal and regulatory instruments affecting the implementation of measures to support new investment projects and the establishment of special customs regimes need to be taken.

This would also require determining the model of working of the managing organization supporting new investment projects. In the Arkhangelsk Region, it is planned to empower the Arkhangelsk Regional Development Agency with this functional ability.

As a significant incentive measure for new investment projects in the Arctic territories, it is proposed to introduce a lower rate of contributions to the state extra-budgetary funds. The ultimate tax rate for the Russian Arctic zone residents will be 7.6%. However, this mechanism will be applied only to the non-mining projects. It is planned that the managing organization on behalf of the resident will pay the remaining part of the contributions directly to the tax inspectorate, for which purpose a transference of the federal subvention is expected.

Simultaneously with the entry of the law into force, an investment web portal with investors’ accounts will be launched.

This system of preferences will apply to the whole territory of the Russian Arctic zone. It is also assumed that for the non-mining projects in the Arctic zone the threshold of investment will be lowered from 10 to 1 million roubles. This will allow entrepreneurs to obtain resident status, which entails a range of benefits and fiscal privileges.

Press Office of the Government and Governance of the Arkhangelsk Region