Parliament approved the creation of a free economic zone in new territories

The Federation Council on Wednesday approved a bill on the creation of a free economic zone in the territories of the Donetsk and Lugansk People’s Republics, as well as the Zaporozhye and Kherson regions. A day earlier, it was adopted by the State Duma immediately in the second and third readings.

According to the bill, the new territories will be subject to a special regime of taxation and the calculation of insurance premiums. Among the benefits offered are a zero rate of income tax, exemption from corporate property tax, as well as land tax on plots of the SEZ territory for three years. In addition, reduced rates of insurance premiums will operate in the zones – 7.6% instead of 30%. It is assumed that businesses in new regions may also be provided with subsidies for bank loans. The minimum investment for work in the economic zone will be 30 million rubles, for small and medium-sized businesses – 3 million, for IT companies – 1 million rubles.

To obtain the status of a FEZ participant, it will be necessary to submit a written application to the management company on the conclusion of an agreement on the conditions of activity in the free economic zone. Support and maintenance of investment projects will be carried out by the FRT (Territorial Development Fund).

According to the explanatory note, the goal of the initiative is to ensure the sustainable development of new regions and attract investment in their economy. The document emphasizes the need to adopt a law for the sustainable socio-economic development of the territories, as well as reducing the outflow of labor and capital.

The free economic zone will operate from January 1, 2024 to January 31, 2050. At the same time, work in the FEZ is planned to begin ahead of schedule, said Maxim Topilin, chairman of the Duma Committee on Economic Policy (his words are quoted by the press service of the State Duma). “We propose to move this period to an earlier period – as soon as the laws come into force, which will allow additional investments in new territories to begin faster,” he said. Information interaction between SEZ participants and the Federal Customs Service will come into force on January 1, 2026, follows from the draft law.

The measure is important for new entities, it will contribute to the development of industry, agriculture, infrastructure, and will allow investors to invest in the modernization of existing industries, the construction of new enterprises, said Sergey Gorokhov, a member of the General Council of Business Russia. Andrey Shubin, Executive Director of Opora Rossii, considers the initiative useful for business. At the same time, he mentioned the need to improve, among other things, insurance measures for companies that will work in new territories in the context of ongoing hostilities. “It is clear that these are risks that entrepreneurs themselves will assess. We probably need some kind of insurance measures for companies, for their property. This factor will be taken into account by entrepreneurs when entering these territories,” Shubin said.

According to the Ministry of Economic Development, the country currently has 50 special economic zones, or SEZs, where 1,019 residents are registered.