Advanced Special Economic Zone in Siberia and Far East of Russia

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

Link to previous article:

Essential Guide to Free Port Vladivostok

What is the Advanced Social Economic Zone ASEZ?

An advanced special economic zone (ASEZ) is part of the territory of a constituent entity of the Russian Federation, where a special legal regime has been established for the performance of entrepreneurial activities.

– Within the ASEZ, tax incentives and administrative preferences for residents apply;

– A resident has the right to receive a land plot from the management company for the implementation of its project;

– A resident has the right to connect to infrastructure facilities: electricity, water, gas, sewerage, heat supply.

How long does the ASEZ mode work?

The economic development of the Far East and Siberia is recognized as one of the priority areas in Russia. A whole range of measures are being taken to create a favorable economic, investment and business climate in the region.

There are 23 territories of advanced special economic zones established throughout Russia.

The geography and scale of development is significant, as demonstrated by the below map:

Tax privileges (Notice*) Each region has its own tax privileges

Income tax:

– 0% for 5 years from the date of the receipt of the first profits.

– 12% for the subsequent 5 years (except for the Republic of Buryatia and Murmansk Region).

The preferential rate in respect of the regional component of the tax is established by the constituent entity of the Russian Federation.

Land Tax:

– 0% for 3-5 years.

The preferential rate is established by the municipality.

Corporate Property Tax:

– 0% for the firts 5 years.

– 2.2% for the subsequent 5 years.

The preferential rate is established by the constituent entity of the Russian Federation* (from 0.5% to 2.2%).

Unified Social Tax

– 7.6 %, Contributions to the Pension Fund, the Social Insurance Fund and the Federal Compulsory Medical Insurance Fund have been reduced from 30% to 7.6%.

Mineral Extraction Tax

– 0%: Decreasing coefficient for 10 years (either 0% or 1%) from the moment of the receipt of the first profits.

Administrative preferences

(Notice*) All ASEZ residents receive preferences for the implementation of their projects.

• Exemption from quotas when engaging foreign employees;

• Provision of a land plot for project implementation;

• Ready-to-use infrastructure;

• Possibility of applying the free customs zone (FCZ) procedure;

• Help desk service for investors;

• Right of the management company to defend the resident in court.

General Q&A

How to obtain land in the ASEZ?

After the signing of the agreement, the JSC “Far East Development Corporation” shall provide a lease for a land plot with a resident of the ASEZ. The rental price is calculated for each land plot individually, taking into account the preferential ratio. After a resident fulfills the terms of the concluded agreement, JSC “Far East Development Corporation” provides the land with property by concluding a sales contract.

On what terms may you obtain land in the ASEZ?

In order to obtain land in the ASEZ, it is necessary to obtain the status of a resident of the ASEZ. If the land does not belong to anyone, is not burdened and the local government gives permission, then the land is granted for the implementation of the project. If the land plot is owned by JSC “Far East Development Corporation”, then the land is also granted for the implementation of the project.

How to connect to the infrastructural facilities (light, water, gas, water disposal, heat supply) in the ASEZ?

JSC “Far East Development Corporation” is building infrastructure in the ASEZ. You need to indicate in the application the needs of your future project in terms of electricity supply, heat supply, water supply, water disposal, gas supply. If your application with this information is approved, you can connect to the infrastructural facilities. For each ASEZ there is an individual schedule for the creation of infrastructural facilities, including, in particular, the timing of the introduction of these facilities into operation.

Is it possible for one company to simultaneously be a resident of ASEZ and Free Port Vladivostok (FPV)?

No, one company cannot simultaneously be a resident of ASEZ and FPV. This is due to the fact that a resident can become a new legal entity or a new investment project with a registration address in the ASEZ and FPV.

How to become a resident of the ASEZ?

1) You need to open a legal entity in one of the regions of the ASEZ!

2) Apply in order to obtain resident status on the website: https://applicationform.erdc.ru/

(Notice*) The minimum investment for applicants for the benefits of residents in the ASEZ has been reduced from 5 million rubles to 500 thousand rubles. 500 thousand rubles amounts to approximately USD 7000.

To register a legal entity in the territory of the FPV, as well as to obtain the status of a FPV resident, please contact D’Andrea & Partners info@dandreapartners.com.