Keeping Pace in the Competition of Preferential Regimes

Today, preferential regimes are considered in the context of competition. I would like to emphasize that this is not an ordinary everyday market competition. This is a competition at the level of government programmes, government decisions and personnel — Vitalii Altabaev, Director of the Department for the Development of Priority Territories of the Far East and the Arctic, Ministry of the Russian Federation for the Development of the Far East and the Arctic.

In 2014, the main tools were invented and introduced. These are the advanced special economic zones, the free port of Vladivostok, the tools for reimbursement of infrastructure costs that Vitalii mentioned. These tools have made it possible to form a portfolio that already has more than 3,200 investment projects. The declared investment amount is already almost RUB 7.5 trillion. Quite a serious amount for investors looking for a project to put their money in, and there really are such projects in the Far East now. And at the moment it is necessary to choose niches quickly, otherwise they will definitely be occupied — Nikolay Zapryagaev, General Director, Corporation for the Development of the Far East and the Arctic.

I have analyzed Rosstat data for the last few years. The growth of investments in fixed assets in the Far East always exceeds the average Russian level. If we evaluate the effectiveness of preferential regimes, a preferential regime always brings more to budgets of all levels than, relatively speaking, it takes away — Sergey Zhuravlev, Vice President of Government Relations, Polyus.

Today, the Far East has really become such a heavy point on the map of Russia for attracting large investments. Thanks to the fact that all these zones were created eight years ago. They did not stop there, but continued to improve further, continued to transform somewhere. I think we will continue to grow — Pyotr Pak, Deputy Chairman of the Government of the Amur Region.

In our opinion, there is certainly room for development. But tax benefits have already reached such a volume that any additional adjustment of tax preferences will no longer lead to a radical change in the investment climate of the industry or the region. We will also work on this. Nevertheless, the adjustment of administrative regimes takes us much longer. We devote a lot of government acts, a lot of legislative drafts to this. The purpose of all this is to reduce procedures and reduce time to enter the investor's platform — Vitalii Altabaev, Director of the Department for the Development of Priority Territories of the Far East and the Arctic, Ministry of the Russian Federation for the Development of the Far East and the Arctic.

In general, preferential regimes are already wonderful. It is difficult to add any other benefits. It is probably important not to talk about adding new benefits, but about a delicate adjustment of what has already been done. When you start working specifically, you get into sometimes even funny or unpleasant situations — Sergey Bachin, General Director, Vasta Discovery.

The advanced special economic zones need to be developed now. We already need to look for new tools. We have made both acceleration programmes and a fund, we use options, we don’t finance RUB 2 million per project, but already RUB 5–10 million. We have financed 21 projects this year with an option system. We finance not only Yakut start-ups, but also start-ups from Vladivostok, Khabarovsk, Ulan-Ude, Krasnoyarsk and other cities, including Moscow. We can share this experience — Anatoly Semenov, Minister of Innovations, Digital Development and Communication Technologies of the Republic of Sakha (Yakutia).

In fact, regimes are universal, but in any case, they currently require additional adjustment using, among other things, our innovations, some mechanisms. Of course, new regimes are being invented, but nevertheless other regions and industry programmes are actively working on their own and borrowing some solutions. Due to geography and some other factors, it is simply more expensive to build in the Far East. The average cost of construction in the Far Eastern Federal District is 30% higher than the average cost in Russia. We have to make not equal, but better conditions for investors — Nikolay Zapryagaev, General Director, Corporation for the Development of the Far East and the Arctic.

The pace of investment growth leads to the need of adjusting the mechanisms. It often happens that a new senior official of the region comes and says: “So, who has passed this law? I don't like the benefits of regional taxes, let's change them.” The rules of the game should not change — Sergey Zhuravlev, Vice President of Government Relations, Polyus.

The market is absolutely bottomless. But we as real exporters are experiencing problems of the following order. First: regulation of quotas from the Russian side, quotas from the Chinese side, duty from the Russian side, import duty from the Chinese side. The import duty, for example, on any grain to China is 65%. Let's harmonize it — Dmitry Savenkov, General Director, Legendagro Primomorye LLC.

The Far Eastern Federal District is a leader by the number of special preferential regimes. The number of residents is growing, the inflow of investments is noticeable. But since the creation of preferential regimes, enough time has already passed to understand on the basis of law enforcement practice what needs to be adjusted, what needs to be corrected in the current regime — Mikhail Orlov, Partner, Head of Tax and Legal, Kept.

What we plan to do with the time section, how we plan to shorten the way. The main thing we are currently focused on is to expand an advanced special economic zone not by decree, but by order of the Ministry for the Development of the Russian Far East and Arctic. The legislative draft is ready, it is being approved. We also want to adjust the land allocation regime, make sure that plot plans are also changed on the basis of the approved territory planning project. The second section, but the first by meaning, is money, how we help with money. The first thing that has already passed is that the investment threshold for residents of the free port of Vladivostok has been lowered from 5 million to 500 thousand. Capital investment requirements for Arctic investors who have the status of SMEs are excluded. What we plan to do and what we are already doing: the first and quite important is linking tax benefits not to a legal entity, but to a project, initiation of the application of benefits chosen by a resident. Now social contributions have already been launched, and we have plans to transfer all tax preferences to the application procedure — Vitalii Altabaev, Director of the Department for the Development of Priority Territories of the Far East and the Arctic, Ministry of the Russian Federation for the Development of the Far East and the Arctic.

It is necessary to extend the benefits to those who conduct operational activities because the pressure on them has increased: prices and costs are growing and demand is falling. It is necessary to extend for them so that they can pay large salaries, not to close enterprises, so that people work there and no tax penalty is formed — Nikolay Zapryagaev, General Director, Corporation for the Development of the Far East and the Arctic.

Here are proposals: to provide a stabilization clause for residents of an advanced special economic zone and the free port of Vladivostok, to provide a mechanism for redistributing savings on overspending when providing infrastructure subsidies, to extend the institute of investment projects until 2037, and to extend the application of investment tax deduction to regional infrastructure facilities — Sergey Zhuravlev, Vice President of Government Relations, Polyus.

There are minor tax issues that can be solved. At least, they are not of a large-scale nature. Decent rules on customs regulation have already been developed for some zones. It seems to me, we should move now to the stage when we should pay attention to other support measures: ready-made infrastructure, affordable fees for connection to all communication networks and competitive tariffs for electricity and water supply, and human capital development: improving the level of education, qualifications, creating conditions for employees of resident companies to feel very comfortable when they come to these territories — Mikhail Orlov, Partner, Head of Tax and Legal, Kept.

If there is employment, an increase in jobs, everyone will support this direction. It is necessary to attract and advertise more job creation in these areas — Andrey Kutepov, Chairman of the Committee on Economic Policy, Federation Council of the Federal Assembly of the Russian Federation.

The entire Far Eastern Federal District has become an advanced special economic zone. Here we have a proposal to the Ministry of the Russian Federation for the Development of the Far East and the Arctic and the Russian Far East and Arctic Development Corporation: let's unite. We have three advanced special economic zones on our territory. In order to administer and manage easier, you can combine and make, for example, an advanced special economic zone of the Amur region — Pyotr Pak, Deputy Chairman of the Government of the Amur Region.

We are preparing documents. In the near future we will make a proposal to the Government to combine all the advanced special economic zones into one. Accordingly, it will become easier to operate them — Vitalii Altabaev, Director of the Department for the Development of Priority Territories of the Far East and the Arctic, Ministry of the Russian Federation for the Development of the Far East and the Arctic.