Measures to Raise Investment Attractiveness

Legal Act Title

Tax Exemption and Other Benefits Provided

to the Investors  Realizing Investment Projects

Law of the Zabaikalsky Krai of 27.02.2009,

no. 148 – ZZK “On State Support of Investment Activities in the Zabaikalsky Krai”

Investors’ state support by government bodies of the Zabaikalsky Krai is realized through:

1)  Tax exemption in compliance with the Tax Code of the Russian Federation and legislation of the Zabaikalsky Krai;

2) Tax exemption provided for lease of property publicly owned by the Zabaikalsky Krai government:

2.1) Partial subsidization of the expenses incurred to realize investment projects of the Krai level of significance, using the Zabaikalsky Krai budget funds, investments volume being not less than 50 mln. rbl.;

3) Partial subsidization of loan interest using the Zabaikalsky Krai budget funds;

4) Subsidization of  lease payments using the Zabaikalsky Krai budget funds, with regard to lessor’s revenue;

5) Partial subsidization of  rewards in return for bank guarantee using the Zabaikalsky Krai budget funds;

6) Partial subsidization of coupons cashing of corporate loans raised upon bonds using the Zabaikalsky Krai budget funds;

7)  Granting state guarantee using the Zabaikalsky Krai budget funds;

8)  Providing investments into registered capital;

9)  Providing investments tax credit;

10) Providing investors with informational and administrative support.

Tax exemption with regard to sums entering the budget of the Zabaikalsky Krai will be granted to the investors realizing investment projects of the Krai level of significance as follows:

·         Profits tax rate with regard to sums entering the Zabaikalsky Krai budget is 13.5 %;

·         Tax rate on business assets is 1.1 %.

The investors realizing investment projects of the Krai level of significance:

·         The investors leasing the property (except for land) publicly owned by the Zabaikalsky Krai government will be taxed at 80 % of lease rate determined by regulatory legal acts of the Zabaikalsky Krai with regard to sums entering the Zabaikalsky Krai budget;

·         Ground rent paid for land publicly owned by the Zabaikalsky Krai government and used to realize investment projects of the Krai level of significance are cut up to 50 % with regard to sums entering the Zabaikalsky Krai budget.

Subsidies to partially reimburse loan interest rate, lease payments with regard to lessor’s revenue, and   for bank guarantee are granted at the rate of 75 % of actual costs paid as loan interest rate, lease payments with regard to lessor’s revenue, and  rewards in return for bank guarantee, but not greater than 75 %  of current refinancing rate of the Central Bank of the RF.

Subsidies to partially reimburse coupons cashing of corporate loans raised upon bonds are granted at the rate not greater than 1/3 of current refinancing rate of the Central Bank of the RF.

Investments into registered capital are granted provided an adequate number of shares but not less than 25 % of the authorized capital plus one share is transferred from shareholders of an open company in action or a newly established one to the Zabaikalsky Krai as a public shareholder.

Law of the Zabaikalsky Krai of 20.11.2009, no. 275 – ZZK “On Innovation Activities in the Zabaikalsky Krai”

Investors’ state support and motivation  is realized as follows:

1) Partial subsidization of loan interest using the Zabaikalsky Krai budget funds, innovative company being recipient of a loan;

2) Tax exemption in compliance with the Tax Code of the Russian Federation and legislation of the Zabaikalsky Krai;

3) Granting state guarantee in compliance with the RF legislation and that of the Zabaikalsky Krai collateral

for innovative company obligations accepted while realizing the innovation project;

4) Providing informational support of innovation activities;

5) Arranging conditions to motivate innovation introduction into social sphere and real economy of the Zabaiaklsky Krai;

6) Assistance in staff training and retraining to realize innovation activities.

The Ordinance of the Zabaikalsky Krai Government of 27.07.2010, no. 302 –“On Approval of the Long-Term Target Program “Innovation Development of the Zabaikalsky Krai” (for the period from 2011 to 2014).

The program under consideration is aimed at creating conditions to provide development of the economy of the Zabaiaklsky Krai  in innovative ways.

One of the tasks to reach the goal is providing financial support for innovative companies and arranging innovative infrastructure, both being underdeveloped.

Innovative companies’ financing  shall be effected through grants to  support research and development work and experimental designing, to realize innovation projects for the benefit of the Zabaikalsky Krai economy in compliance with priority areas of economic activities.

Law of the Russian Federation “Concerning Foreign Investments in the Russian Federation” (enacted by the State Duma on 25.06.1999, no.160-FZ)

Constituent entities of the Russian Federation and local government bodies shall provide foreign investors with tax exemption, benefits and guarantees, financing and other forms of support within the ambit of their competence to realize foreign investors’ projects using either the budget funds of both the constituent entities of the RF and local governments or extra-budgetary funds.

Regulations “Concerning the Order of  Exemption on Rentals Paid for Municipal Property Lease and/or  Leased Facility  within the Jurisdiction of Local Government  Bodies” (approved by the decision of the Chita City Duma, of 08.04.2004, no. 69, as revised by the Decision of the “City of Chita” Urban District Duma of 24.03.2005, no.45)

By the decision of the “City of Chita” Urban District Duma in accordance with current legislation  exemption on rentals is granted to registered legal entities and individuals with regard to the sums portion being held by the municipal entity for a specified period within the limits of financial year:

·         Tax exemption on ground rent rate paid for land plots publicly owned by municipality and/or  being operated by  local government  bodies of the “City of Chita” urban district;

·         Tax exemption on non-residential premises, buildings, structures, and other facilities within the municipal jurisdiction.