Special Administrative Region

Within this article, we shall continue our series of articles exploring “How to Conduct Economic Activities” in the Far Eastern and Siberian region of Russia!

Link to previous articles:
Free Port Vladivostok #FPV https://www.dandreapartners.com/free-port-vladivostok/
Advanced Special Economic Zones #ASEZ https://www.dandreapartners.com/advanced-special-economic-zone-in-siberia-and-far-east-of-russia/

What is a Special Administrative Region SAR?

A Special Administrative Region (#SAR) is a territory with a flexible tax and currency regulation regime for companies that are interested in transferring from a foreign jurisdiction to a Russian jurisdiction.

Goals and objectives of SAR on Russky Island:

  • Formation of favorable financial and administrative conditions for the development of the business environment
  • Attraction of capital to the Russian Federation
  • “Deoffshorisation” of the economy
  • Infrastructure development of the territory of Russky Island

Locations: Russky Island, Vladivostok, Russian Federation

According to Federal Law of Russian Federation No. 291-FZ issued on March 8th, 2018, The Russian Far East and Artic Development Corporation (#FEDC) is a management company registered in the jurisdiction of the SAR on Russky Island, Vladivostok.

The main objectives of the FEDC:

  • Involvement in the registration of international companies
  • Making decisions on granting member status of the SAR
  • Maintaining a registry of SAR participants
  • Coordination of activities and administrative support for SAR participants
  • Providing SAR participants with the services necessary to carry out their activities (including legal & accounting services)
  • Monitoring of the activities of international companies

 

What kind organization may obtain resident status of SAR on Russky Island?

A foreign legal entity that is an international commercial corporation which is interested in changing jurisdiction to obtain currency control advantages and tax advantages. If a legal entity obtains residency, it will become an (#IBC) International Business Company.

 

Advantages:

  • Transfers of funds without restrictions in both foreign and domestic currencies from and into the territory of Russia without opening an account

 

Tax Privileges:

  • Dividends in favor of IBC – 0%
    Subject to the following conditions: equity participation of > 15% and tenure <1 year

 

  • Dividends to foreign persons from the IBC5%

Subject to the following conditions: equity participation of > 15% and tenure >1 year
No more than 50% of assets are in real estate
Shares have not been contributed to the charter capital of the IBC within 1 year before or after the date of registration of the IBC (and if they are acquired by a company as a result of reorganization)

 

  • VAT on the import of ships into the territory of the Russian Federation0%
    Registration in the Russian Open Register of Ships

  • Income for the purpose of determining the tax base for tax on profits from the operation of ships is not taken into account

Registration in the Russian Open Register of Ships

  • Transport tax for aircraft and ships0%

Registration in the Russian Open Register of Ships or the State Register of Civil Aircraft

  • Property tax on aircraft and ships0%

Registration in the Russian Open Register of Ships or the State Register of Civil Aircraft

  • Insurance premium rates for ship crew members0%

Registration in the Russian Open Register of Ships up to 2027


If you are interested in registering an International Business Company in the Special Administrative Region please feel free to contact the Russia Desk of D’Andrea & Partners Legal Counsel at russiadesk@dandreapartners.com