Russia has developed a draft law on the free economic zone of Donbass

The Ministry of Construction, Housing and Communal Services of Russia has developed a draft law on the creation of a free economic zone (FEZ) in the Donetsk and Lugansk People’s Republics, as well as in the Kherson and Zaporozhye regions. About it informed RBC with a link to the source.

The law will allow “to ensure the sustainable socio-economic development of new entities,” according to the Ministry of Construction. The SEZ on the territory of the DPR, LPR, Zaporozhye and Kherson regions will start operating from January 1, 2024 until the end of 2050.

To participate in the SEZ, it is necessary to be registered in the territory of new regions or have branches there, clarified in RBC. Also, the volume of investments of a resident must be at least 3 million rubles. in the first three years for small and medium-sized businesses, and for other companies it should be at least 30 million rubles. At the same time, if a participant in the economic zone implements an investment project in the field of computer technology, the creation of software (SW), scientific research and development, then the volume of such investments will be at least 1 million rubles.

The SEZ rules in the annexed territories will include the possibility of granting subsidies for reimbursement of the interest rate on loans, i.e. up to 100% of the refinancing rate of the Central Bank of Russia. In particular, it is planned to establish a free customs zone – imported foreign equipment into the territory of the economic zone for the implementation of investment projects will be exempted from paying customs duties.

A separate bill can also establish a rate from 0 to 13.5% on income tax to the federal budget, which was received from the implementation of such investment projects. In addition, the law provides for exemption from property tax for ten years for property on the balance sheet of a FEZ participant and from land tax for three years.

On October 5, 2022, the Ministry of Economic Development of Russia announced the creation of a single free economic zone in new territories. Then the department said that the regions can exempt from paying income tax to the federal budget for 10 years. At the end of February, about the emergence of an economic zone in the DPR told Chairman of the Government of the region Vitaly Khotsenko. Then he said that the SEZ will be with “unprecedented” conditions and is based on the “Crimean” option.

The FEZ in Crimea began to operate on January 1, 2015. It provides for preferential treatment in the field of land relations, construction, special conditions for entrepreneurs, benefits and preferences for investors, as well as the possibility of applying the free customs zone procedure. FEZ businessmen, in particular, do not pay property tax for the first 10 years, the first three years are exempt from land tax (if they own it) and deduct insurance premiums at a reduced rate (7.6% instead of 30%). The economic zone in Crimea and Sevastopol is valid until the end of 2039.