Putin gives green light for free economic zone on Kuril Islands

Russian President Vladimir Putin has officially given the green light for establishing a free economic zone on the Kuril Islands.

At the plenary session of the Eastern Economic Forum, Putin announced an "unprecedented" set of tax incentives, which should create the best conditions for business in all of Asia.

"We will completely exempt business from paying key taxes on profits, property, land and transport tax. And for 10 years," Putin said, adding that this will apply to the companies that do not just register in the Kuril Islands, but really work in the region, build buildings, enterprises, hire employees.

"For such companies, reduced insurance premiums of 7.6% will also be established, also for 10 years. In addition, the regime of 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," Putin said.

According to him, VAT will also not be charged in this zone, "until the goods leave the territory of the Kuril Islands."

At the same time, the regime will not apply to all types of activities. “The exception will be the work of intermediaries, the production of excisable goods, the production and processing of hydrocarbons, as well as fishing for aquatic biological resources," Putin explained. "It's clear, because these are already highly profitable activities, highly profitable businesses."

"We need to create competitive conditions for the work of our partners here. This means that the current parameters of the tax burden, the cost of borrowed capital, the speed and quality of public services for business should be globally competitive, as I just said. The best, not better, but the best in the entire Asia-Pacific region," TASS quoted Putin as saying.

The Kuriles will become "in fact a Russian free economic zone," said on August 16, the presidential plenipotentiary representative in the Far Eastern Federal District Yuri Trutnev.

"I am sure that such a preferential impetus to the development of the islands will be heard by both Russian entrepreneurs and our neighbors. We very much hope, over the next five years, I am confident that we will feel the advanced dynamics of the development of the Kuril Islands. We will just master them," Trutnev said.

The Kuriles will become the third Russian free economic zone after the special administrative regions were created on the Russky Island in the Far East and on Oktyabrsky Island in the Kaliningrad Region.

The first two turned out to be a "Potemkin village": only 40 companies registered in them, and even those "do not provide a real presence," a source in the government complained to the newspaper Izvestia at the beginning of the year.

Companies have become residents of the islands only on paper. They do not invest in the development of the territories and make only formal contributions of the minimum amount. For example, the Kaliningrad region collected less than 0.5% of tax revenues from its free economic zone.

  Kuril Islands, Putin

Comments

Please visit out Twitter account for updates on the situation in Ukraine.