Special Economic Zones in Russia(SEZ) are designated areas within the country that offer favorable conditions for investment and economic development. These areas offer foreign investors certain advantages such as: tax breaks, customs exemptions, and streamlined regulatory procedures for businesses operating within SEZ. If you are interested in opening a company in Russia in these special economic zones, our team can help you navigate the complex legal and regulatory landscape and take advantage of the benefits offered by the SEZ.
Types of Special Economic Zones in Russia
There are several types of Special Economic Zones in Russia, including free port zones, free economic zones, and technological parks. Each type offers a different set of benefits and incentives, with the aim of attracting different types of investors and businesses. Some of the most significant areas are located in: Dubna, Murmansk, St. Petersburg, Khabarovsk and Alabuga. There are many opportunities and benefits in setting up a company in Russia in these types of areas.
Currently, there are 45 Special Economic Zones in Russia, which can be classified into four categories: 26 zones are focused on industry and production, 7 zones – on technology and innovation, 10 zones – on tourism and recreation, and the other 2 zones are port-focused.
The Alabuga Special Economic Zone in Russiaspecializes in attracting investment in the areas of automotive and mechanical engineering, chemicals, and materials science.The zone is also home to a number of research institutes and universities, making it an ideal location for businesses that are looking to collaborate with the scientific community.
Our company formation specialists in Russia can help you establish your business more efficiently and effectively.
How to open a company in the Special Economic Zones in Russia
The process of establishing a company in any Russianregion involves first researching the area you’re interested in and understanding the benefits and incentives it offers to businesses operating there. You must also develop a detailed business plan that outlines your objectives, target market, competition, and financial projections. All this information must be submitted to the specific area authorities. Then, you need to obtain the necessary licenses and permits and register your business with the tax authorities, obtain a business license, and comply with other regulations.
If you do not have a property in Russia for operating your business, you can lease or purchase one.
It is important to know that in Russia, the formation of offshore companies is not allowed under the country’s laws. However, in these SEZs, the government has established some favorable tax systems. Companies operating within these zones are permitted to import and export goods without paying duties. The validity of these offshore arrangements is limited to 15-20 years.
Our Russian lawyers can assist you in navigating the legal and regulatory requirements involved in starting a business in these areas.
The advantages of opening a business in Special Economic Zones in Russia
There are several advantages of setting up a business in a special economic zone in Russia. You can take advantage of thefavorable tax system, including reduced corporate tax rates, tax holidays, and exemptions from certain taxes. As we mentioned before, businesses are exempt from paying import and export duties and quotas, making international trade easier and more profitable.
The SEZ profit tax rate is only 2-5%, compared to the national rate of 20%, for up to 5 years, which helps businesses to reduce their tax burden and increase available cash for expansion and development. Additionally, some SEZs provide tax reductions on VAT (0% VAT in areas such as Dubna and Kaliningrad) and property and land use rights (zero or close to zero land and property taxes). They also offer lower utility rates for electricity and water, which lowers the operating costs of businesses operating in these zones. These advantages helped many foreign investors expand their businesses in SEZ, and establish branches or subsidiaries within these areas.
For example, The Alabuga Special Economic Zone in Russiais among the most prosperous in Russia, offering lower profits taxes (2% for the initial five-year period, 7% for years 6 to 10, and 15.5% until the year 2055) and no land and property taxes. Additionally, there are discounts on social insurance, up to 14%. Its strategic location allows businesses in the SEZ to access markets in Central and Southern Russia easily.
The government also provides additional support to businesses operating in these areas, including access to financing, investment promotion, and support for innovation.
Your business can profit from access to modern infrastructure and facilities, skilled workers and professionals, and the short time and low cost of starting a business.
Here are some interesting data for the latest investments in the SEZs in Russia:
- – In 2018, the Alabuga special economic zone was named the best SEZ in Russia based on the National Investment Attractiveness Rating.
- – The total amount of investments from China was USD $38 million between the years 2015 and 2018 in SEZs.
- – In 2018, U.S. investors poured over a billion dollars into special economic zones.
Please contact our company formation specialists in Russia to take advantage of the benefits offered by the special economic zones such as tax incentives and streamlined regulations.