The government approved the creation of international priority development territories

Yesterday the government approved and submitted to the State Duma a package of bills on the creation of special international priority development territories (ITORs). Their purpose is to implement projects with high added value together with partners from “friendly” countries. Features of the new “zones” include the possibility of closing information about their residents to protect businesses from sanctions, as well as longer tax breaks. It is expected that the first MTORs will be created by the end of next year. Negotiations are being conducted, in particular, with China and India, with the countries of the Middle East and the EAEU.

The government yesterday submitted to the State Duma two bills on the creation of international priority development territories – a new type of preferential regime for business development, primarily in the Far East. In contrast to the usual priority development territories already operating in this macroregion, the international “modification” is primarily aimed at attracting partners and technologies from “friendly” countries.

The creation of an MTOR has been discussed since September 2022. As Alexey Chekunkov, head of the Ministry of Eastern Development, told Kommersant, the first such entities will be created before the end of 2024, and the first enterprises will appear in them at the beginning of 2025. Negotiations, according to the minister, are being conducted with China and India, with the countries of the Middle East and partners in the EAEU. Work with potential investors for promising sites is carried out in almost all regions of the Far East, explained Alexey Chekunkov. It is especially active in the border regions (Primorsky, Khabarovsk and Transbaikal Territories, Amur Region, Jewish Autonomous Region, Buryatia).

According to the introduced bills (the main and accompanying amendments to the Tax Code), MTORs will be created by decision of the federal government or on the basis of an international treaty. The agreement, as noted in the explanatory note to the first project, may “reflect additional features of the implementation of activities in a specific MTA, depending on the requests of foreign investors and the interests of the Russian Federation.”

Foreign and Russian companies (including those with foreign participation) can become MTOR residents – and these must be new, that is, “freshly created” organizations. For residency they need to invest at least 500 million rubles. into a project for the production of products with high added value. As Alexey Chekunkov explains, these could be, in particular, projects in mechanical engineering, the production of spare parts, energy products and export-oriented products, as well as in the field of processing agricultural products. What is essential is that the project must be agreed upon with the government commission for the development of the Far East.

A special feature of MTORs will be the possibility of closing public access to information about their residents to protect against sanctions. At the same time, investors will be provided with longer-term tax benefits than in “regular” ASEZs: zeroing out both parts of the income tax for ten years (for the federal part this is usually five years, for the regional part it is also five, but with a subsequent five-year reduced rate). The expansion of preferences is explained by the government by the fact that in “regular” ASEZs there is an “extremely limited” representation of projects aimed at the production of high-tech products (which is associated with the need for large and lengthy capital investments). Residents will also be able to apply reduced insurance premium rates for ten years – 7.6% instead of 30% (in the original version of the project it was proposed to apply all benefits for 20 years, see Kommersant on March 13). It is also possible to use free customs zone procedures.

General Director of the Gebel consulting group Sergei Gebel notes that ten-year benefits “approximately correspond to the time required to create production, master technologies and start full-fledged activities.” Leading researcher at the Center for Spatial Economics of the Institute for Economic Research of the Russian Presidential Academy of National Economy and Public Administration, Alexander Kotov, notes that in the current situation we can count on further growth in Chinese investment, primarily in the development of mineral resource centers. In addition, he says, MTORs can become the basis for cooperation with Vietnam, as well as with Indian companies, primarily with specialization in the oil and gas, food and chemical industries.

Evgenia Kryuchkova