Russia will introduce unprecedented incentives for businesses aiming to invest in the Kuril Islands, including a 10-year tax exemption, President Vladimir Putin said at the plenary session of the Eastern Economic Forum on Friday.
“We need to create a competitive environment for our partners to work here. This means that the parameters of the tax burden, the cost of borrowed capital, the speed, and the quality of public services for business should be globally competitive. The best, not better [environment], and the best in the entire Asia-Pacific region,” Putin said.
According to the head of state, the task is difficult and the set of measures proposed is unprecedented, but the outcome will be mutually beneficial for all.
“It is, in fact, an unprecedented set of benefits and incentives that we will create in the Kuril Islands, for example, where we will completely exempt businesses from paying key taxes on profits, property, land and transport taxes for 10 years,” Putin revealed.
He emphasized, however, that the perks will apply to firms that don’t just register in the Kuril Islands, but actually work in the region, set up enterprises, construct infrastructure and hire employees.
“For such companies, lower insurance premiums will be established at a rate of 7.6%, also for 10 years. In addition, a free customs zone will operate throughout the Kuril Islands, that is, it will be easier and more convenient to import goods, equipment and export finished products,” he explained. The Kuril’s produce will also be exempt from VAT “until the goods leave the territory of the Kuril Islands.”
There will, however, be exceptions from the program, according to the Russian president.
“The exceptions will include the work of intermediaries, manufacturing excisable goods, extraction and processing of hydrocarbons, as well as catching valuable aquatic biological resources,” Putin said.
According to Russia’s Chamber of Commerce and Industry president, Sergey Katyrin, the work on the free customs zone in the Kurils is already underway.
“The introduction of the free customs zone on the Kuril Islands is not simply under discussion, preparatory works are being completed,” Katyrin stated, noting that the proposed measures will enable the region to more actively develop its investment, industrial and tourist potential.