A brief comparison of three localization options for a green field investment in Russia: (1) Special Economic Zone set up the central gov (2) Industrial park set up by local governments (3) Elsewhere Special economic zones offer by far the largest tax incentives in Russia. Long periods of income tax breaks and extremely cheap lands are among the most significant incentivrs. However their location is outside the geographical scope of most investors, i.e. outside the Moscow and Skt. Petersburg (Leningrad) regions. Industrial parks set up by some local governments (such as the one in Kaluga) offer much richer choice in terms of location, while the incentives are less lavish than in SEZs but still significant. Incentives offered by most other regional governments are more moderate than in the above mentioned options.

1. Incentives for FDI in Russia
August 18, 2012
A brief comparison of three localization
options for a green field investment in Russia:
(1) Special Economic Zone set up the central gov
(2) Industrial park set up by local governments
(3) Elsewhere

2. Centrally located regional
Investment Regions with average or below Federal Special Economic Zone
industrial parks (set up by local
localization average incentives for investors (e.g. SEZ Togliatti)
governments, e.g. Kaluga)
Tax exemptions Negotiable Automatic Automatic
$4m within 3 years
Minimum investment Unspecified Unspecified
$1,3m within 1st year
2% 2012 – 2018
Corporate income tax
5% 2019 – 2020
Negotiable: Mostly -4,5% for 5 years
9% 2021 – 2022
default rate in Russia: -4,5% for 1 to 5 years (in Kaluga w/o time limit)
12% 2023 – 2024
20% on average
15,5% 2025 and further
Other taxes Exemption from property, land and
transport tax for 5-10 years
Exemption from property tax Exemption from property tax
Default rates:
for 5 years for 5 years
Property tax 2,2% Accelerated depreciation of fixed
Land tax 1,5% assets (at the rate of 2)
Equipment not produced in Russia Equipment not produced in Russia Materials, goods and equipment
Customs preferences
exempt from VAT exempt from VAT under customs regime inside SEZ
In regions where the investment Relocation of company from other
Relocation of company from other
incentives are negotiable fewer regions is compatible with
regions to Kaluga region is
Note new jobs created mean lower obtaining the tax exemptions
compatible with obtaining the tax
leverage for negotiation with the (provided investing further $4m
exemptions
government within 3 years)
Sources: Documents of regional governments, special economic zones and regional industrial parks
Interviews with officials of regional governments, special economic zones and regional industrial parks