The document provides an overview of investment opportunities in the Sverdlovsk Region of Russia. Key points include: 1) The Sverdlovsk Region has a large, diversified industrial base and is a major transportation hub between Europe and Asia. 2) The region offers tax incentives and preferential treatment for companies investing in its new Industrial and Manufacturing Special Economic Zone. 3) Investors will benefit from the region's skilled workforce, research institutions, and proximity to raw materials and major markets.

1. Guide to Investment
Sverdlovsk Region
Industrial and manufacturing
special economic zone

2. PwC Russia (www.pwc.ru)
provides industry-focused assurance, tax and advisory services. Over 2 000
professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg,
Kazan, Yuzhno-Sakhalinsk and Vladikavkaz share their thinking, experience and
solutions to develop fresh perspectives and practical advice for our clients. The
global network of PwC firms brings together more than 161 000 people in 154
countries. PwC first appeared in Russia in 1913 and re-established its presence here
in 1989. Since then, PwC has grown to become the largest professional services
provider in Russia. According to the annual rating prepared by the independent
rating agency Expert RA, published in Expert magazine, PwC is the largest auditor,
tax and legal advisor in Russia (see Expert, 2000-2010). This overview has been
prepared in conjunction with and based on the materials provided by the Ministry
of Investment and Development of the Sverdlovsk region and the Ministry of
International and Foreign Economic Relations.
This publication has been prepared for general guidance on matters of interest
only, and does not constitute professional advice. No representation or warranty
(express or implied) is given as to the accuracy or completeness of the information
contained in this publication, and, to the extent permitted by law, PwC, its members,
employees and agents accept no liability, and disclaim all responsibility, for the
consequences of you or anyone else acting, or refraining to act, in reliance on the
information contained in this publication or for any decision based on it.
2 | Guide to investment | PwC

3. Contents
2 Welcome message from the Governor
of the Sverdlovsk Region
4 Foreword by the Managing Partner of PwC in Russia
7 General information about the Sverdlovsk Region
Economic and geographical location
Administrative and territorial divisions
10 Key advantages of the Sverdlovsk Region:
Investment potential
Economic potential
Key Eurasian transportation hub
Large industrial centre
Foreign trade activities
Research and innovation capacity
Human resources
21 Special economic zones in Russia
Background
23 Industrial and manufacturing Special economic zone
in the Sverdlovsk Region
Location and infrastructure
Transportation advantages
Tax and customs preferences
Procedure for obtaining special economic zone
residential status
Conclusion
32 Contact details
PwC | Sverdlovsk Region | 3

4. 4 | Guide to investment | PwC

5. Welcome message from the Governor
of the Sverdlovsk Region
Dear all,
The Sverdlovsk Region has truly earned its reputation as Russia’s “core” territory – it is one of the
nation’s strongest, fastest growing and most attractive for investment. This is where rich natural
resources, powerful industrial complex and solid scientific, cultural and human potential all come
together.
The Mid-Urals is the place where, over three centuries ago, Russia’s metal industry came to life and
thrived and has since become well-known the world over. Extensive industrial experience, a powerful
resource base and skilled professionals put the Sverdlovsk Region among the leaders in terms of
manufacturing output.
Having successfully recovered from the economic crisis, the region is now moving towards the creation
of high tech and knowledge-intensive production and is transitioning from an old industrial region to an
area of innovative development.
And this is why the creation of the Titanium Valley industrial and manufacturing special economic zone
is a milestone event for this region, giving every investor an opportunity to fully appreciate and utilise
the vast potential of the Mid-Urals and unique conditions for the development of innovative high tech
industries.
We are ready to provide guarantees to all investors, both domestic and international. To do so, we have
already taken a number of administrative measures at the regional and federal levels. For example, the
Russian Direct Investments Fund will be ready by summer 2011. In the near future, a special institution
of investment representatives will be set up in each of Russia’s constituent regions, and the Sverdlovsk
Region has already established the Ministry of Investment and Development.
We are growing fast and strive to meet all business requirements to ensure the sustainability of our
economic development and build our confidence in the future.
Welcome to the Sverdlovsk Region!
Alexander Misharin
Governor
Sverdlovsk Region
PwC | Sverdlovsk Region | 5

6. 6 | Guide to investment | PwC

7. Foreword
Dear all,
Relative political stability and a rapidly expanding economy have created significant investment
opportunities in Russia.
The Urals is one of Russia’s most favourable regions for investment. It is a large industrial region,
situated at the crossroads of important routes connecting Europe and Asia. The Sverdlovsk Region is
rich in natural resources and has a strong, diversified production and industrial sector, great intellectual
potential and a skilled labour force. The Urals is also known for its strong history of academics and
advanced field research.
Stable economic growth is making the Sverdlovsk Region more attractive for many Russian and foreign
investors, allowing them to operate successfully in metals production and manufacturing. The Urals’
steady economic growth over the past few years has attracted a lot of Russian and foreign investors.
According to Russia’s policy aimed at increasing foreign investment, a number of special economic zones
(SEZ) have been established across the country over the last several years. On 16 December 2010, the
Russian government established an SEZ in the Sverdlovsk Region. This industrial SEZ was created to
bolster the economy of Russia and the Sverdlovsk Region by providing favourable tax, administrative,
economic and business conditions for companies interested in investment projects in industrial
production.
This overview of the project, investment policy and opportunities offered is intended to serve as an aid
to investors looking forward to expanding operations in Russia. It would also help potential investors to
assess the most competitive advantages offered by the Sverdlovsk Region.
This document has been prepared in collaboration with the Sverdlovsk Region Ministry of Investment
and Development and the the Ministry of International and Foreign Economic Relations and is based on
materials provided by the Ministries.
I hope that this publication will inspire investors to pursue new achievements and initiatives. I wish the
Sverdlovsk Region Administration continued success in making the region prosperous.
David Gray
Managing Partner
PwC in Russia
PwC | Sverdlovsk Region | 7

9. General information
about the Sverdlovsk
Region
PwC | Sverdlovsk Region | 9

10. 1 Severouralsk
2 KrasnoTurjinsk
3 Serov
4 Kachkanar
5 KrasnoUralsk
6 Verkhnjaja Salda
7 Nizhnjaja Salda
8 Nizny Tagil
9 Turinsk
10 Alapaevsk
11 Irbit
12 Verkhny Tagil
13 Novouralsk
14 Verkhnyaya
Pyshma
15 Asbest
16 Tugulym
17 Pervouralsk
18 Beresovsky
19 Sukhoy Log
20 Achit
22 Ekaterinburg 21 Revda
23 Belojarsky
24 Bogdanovich
25 Krasnoufimsk
26 Arti
27 Polevskoy
28 Sysert
29 Kamensk-Uralsky
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11. Economic and geographical location Administrative and territorial
division
The Sverdlovsk Region is one of the fastest
growing regions in Russia and is located on the The executive authorities of the Sverdlovsk
border between Europe and Asia. This is where Region are represented by its Governor and
a powerful industrial complex, rich natural Government. The region has 47 towns, 26
resources, large transportation flows, solid workers’ and urban-type settlements and 1 843
scientific and human potential combine. villages. It is divided into five administrative
districts: Gornozavodskoy, Severnyi, Zapadnyi,
The economy of the Sverdlovsk Region is an Vostochnyi and Yuzhnyi, with its administrative
industrial one, and its structure encompasses all centre in Ekaterinburg, which is the capital of the
key sectors of the industrial complex. This region Urals Federal District and Russia’s fourth largest
is among Russia’s top ten, which account for 60% city by population.
of the country’s industrial products. The level
of concentration of manufacturing industries in Ekaterinburg ranked third in the 2010 Forbes
the region is four times higher than the national rating of the best Russian cities for business.
average. The city has confidently positioned itself as this
Eurasian region’s centre and has the necessary
What makes this region unique is its international business infrastructure in place. As
advantageous geographical location on the a result, the Sverdlovsk Region’s authority and
border between the European and Asian parts recognition are growing exponentially.
of Russia, i.e. at the focal point of the country's
transport corridors. The regional centre is
Ekaterinburg, located in 1 700 km from Moscow
on the eastern slope of the Urals. The Sverdlovsk
Region is rich in natural resources for the ferrous
and non-ferrous metal sectors, as well as the
chemical industry. For many years, one of the
key priorities of the region’s economic policy
has been to create a favourable environment
for attracting investment and developing
international business activities.
PwC | Sverdlovsk Region | 11

12. Key advantages
of the Sverdlovsk
Region
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13. Indicators of social and economic development
1. High investment potential, low show the region’s vast potential for the
investment risks and stable financial development of the Urals’ economy and its
position resistance to fluctuations in global markets due
to the diversified structure of its manufacturing
2. Leadership among Russia’s constituent industries and the radical modernisation
regions in terms of economic processes currently underway.
development
3. The largest transportation and logistics
hub in the Urals Region Finance
4. Multi-industry manufacturing complex
5. Developed foreign trade activities Regional budget in 2011
infrastructure 3 085 bln. euro
6. High level of academic knowledge,
university and industry R&D potential
Capital invrstment in 2010
7. Skilled labour and a substantial 5 425 bln. euro
innovation potential
Foreign investment 2010
1 084 bln. euro
Investment potential
Sverdlovsk is one of Russia’s top constituent
regions for investment. Over many years, the
region has enjoyed steady and sustainable
growth at rates much higher than the national
average.
The region has a great talent pool and scientific
potential, a developed business infrastructure
that meets global standards, effective
investment support legislation and a successfully
implemented long-term regional social and
economic development strategy.
It is the fifth most populous region in Russia,
according to the Territorial Agency of the Federal
State Statistics Service for Sverdlovsk Region,
and ranks fourth among Russia’s constituent
regions in terms of the volume of regionally
manufactured products dispatched and
wholesale and retail turnover.
PwC | Sverdlovsk Region | 13

14. Economic potential
As a result of a positive trend in the region’s Rating of Sverdlovsk Region
development over the last few years, its long-
term credit rating has been continuously on
the rise; this sustainable financial position
has become one of the region’s most attractive Industrial Production 6
aspects. In 2010, Standard & Poor’s rating agency
once again affirmed the region’s BB credit rating.
A low debt burden, the regional authorities’
pursuing a conservative debt management
Retail turnover 4
policy, financial support from the federal budget,
significant industrial assets, and high liquidity
and people welfare indicators that are above the Wholesale turnover 4
Russian average have had a positive effect on
the region's credit quality. Confirmation of this
positive credit rating enhances the Sverdlovsk
Region’s investment attractiveness, facilitates the Capital Investments 9
expansion of the range of potential investors and
creditors, and broadens access to borrowings and
other sources of capital. This in turn contributes
to the further growth of the region’s economy.
Foreign Investments 8
The Sverdlovsk Region’s internal regional
product is RUB 835bn (2009: sixth among
Russia’s regions).
There are 73 lending institutions operating in the
Sverdlovsk Region, including those with foreign
investment: Raiffeisen Bank, Barclays Bank,
Intesa Bank, Societe Generale Vostok, Citibank,
Home Credit and Finance Bank and others.
Leading global audit, consulting, insurance and
leasing companies also operate in the region.
The implementation of large investment projects
by foreign companies has demonstrated that the
region’s economy is open to foreign capital. Over
just the last three years, Boeing (US), Siemens
(Germany), Buzzi (Italy), OMIA (Switzerland),
Saint Gobain (France) and others have been
launching and successfully implementing their
investment projects in the region.
The law “On state support for investors in the
Sverdlovsk Region”, aimed at creating favourable
conditions for investment overall and support for
foreign investments, is in effect. The key investor
support arrangements are state guarantees, tax
exemptions and a number of other measures
taken as part of governmental support.
14 | Guide to investment | PwC

15. Key Eurasian transportation hub
The Sverdlovsk Region is advantageously located
where Europe and Asia meet, determining the
region’s importance as a key transit centre in
Russia. The region’s transport infrastructure is
being developed in accordance with a number of
federal and regional programmes.
The Sverdlovsk Region Administration has
adopted a framework for the development of the
region’s transportation and logistics system for
2009-2015 (with an outlook up to 2030) in line
with federal law. This framework is currently
being implemented. According to this document,
the Sverdlovsk Region is developing as a large
international logistics centre with an interregional
managing centre. It serves international and
regional communications and transit traffic, such
as the main latitudinal corridor (an extension of
the International Transport Corridor No. 2 Berlin-
Moscow-Nizhniy Novgorod through Ekaterinburg – Sverdlovsk Railway is the main connecting
to Beijing), made up of the existing Transsib and handling centre for freight and passenger
railways and the Ekaterinburg-Tiumen and traffic between Europe and Asia and has a unique
Ekaterinburg-Kazan highways. geographical position and significant resources.
Today, the market served by Sverdlovsk Railway
In developing a transportation hub linking covers 10.5% of the country's territory, 7.4% of
Europe and Asia, the region intends to build an its population and ensures the operation of 7% of
efficient transportation and logistics system, the Russia’s basic production assets;
components of which include:
– A developed network of roads, including the
– Koltsovo international airport hub, which is West-East International Transportation Corridor
the largest airport hub in Russia after Moscow and a system of highways;
and St Petersburg and facilitates the economic
and social development of the Sverdlovsk Region – A network of international- and interregional-
and its integration into the global economy, as level terminal and logistics complexes for
well as an expansion of business, culture and transferring, storing and handling Eurasian
tourism; commodity flows.
PwC | Sverdlovsk Region | 15

16. Large industrial centre The machine building complex specialises
in the production of machines and equipment,
The region’s level of manufacturing industry electrical equipment, electronic and optical
concentration is considerably higher than the equipment, and transport vehicles. It includes
national average, allowing the Sverdlovsk Region 240 large and medium enterprises and is one of
to take pride in its role as Russia's industrial the core industries in the Mid-Urals’ economy. It
centre. has traditionally been the most innovative and
technically advanced sector of the manufacturing
The Sverdlovsk Region’s industries cover industry, employing more than 180 000 people.
almost all existing types of economic The region’s machine-building enterprises are
activities. Traditionally, the region’s industrial also large consumers of manufacturing products.
specialisation includes the ferrous and non-
ferrous metals industry, metal processing,
machine building and power generation,
including nuclear power.
Structure of volume of the shipped
goods and services in 2009
(in % total amount)
14,8% Production
and distribution
of energy,
gas and water
44,8% Metallurgy
18,5% Machine-building
17,1% Other activities
4,8% Mining
80,4% Manufacturing
activities
16 | Guide to investment | PwC

17. The metals complex specialises in the
production of metal and finished metal products, Export structure in 2010
and includes the production of finished steel and
steel pipes, pellets and ferroalloys. The non-
17,7%
ferrous metals industry manufactures primary
aluminium, titanium rolled products, refined
copper and copper concentrate.
Mining: The Sverdlovsk Region is among
Russia’s most mineral resource-rich areas. The
region accounts for 97% of the vanadium, 68%
of the bauxites, 23% of the iron ore, 6% of the 46,7% 21%
copper and 2% of the nickel extracted in Russia.
It is known for its high level of extraction of
alluvial gold and platinum, hard rock gold, raw
materials for the construction industry, facing
and fabricating materials, etc.
14,6%
Wood processing and woodworking: The
wood market, comprising mostly lumber and ply
wood, is oriented towards the domestic market n Machinery equipment production
and export primarily to the US and Europe. n Chemical production
n Other
Currently, the Mid-Urals area is also witnessing n Metal and metalware
fast growth in the production of electronic and
optical equipment, pharmaceuticals and health
products.
Import structure in 2010
11,7%
17,8%
12,5%
10,6%
47,4%
n Metal and metalware
n Chemical production
n Mineral products
n Machinery equipment production
n Other
PwC | Sverdlovsk Region | 17

18. Commodity
import
USA
China
Germany
United Kingdom
France
Czech Republic
Technologies
Italy
People
Information
Attract
investment
USA
Germany
Netherlands
Ekaterinburg
We have trade partners
from 120 countries
18 | Guide to investment | PwC

19. Foreign trade activities
According to the Russian Ministry of Foreign
Affairs, the Sverdlovsk Region ranks third in
Commodity the country in terms of the number of official
consular and trade missions of foreign countries
export (over 20). The region has more than 130 trade
partners.
Germany Geographically, the region’s key foreign trade
partners continue to be industrially developed
Italy countries, which account for over 50% of its total
commodity turnover. These countries are the
Vietnam key consumers of metals and metal products,
machine-building products and chemicals,
Austria which constitute the core of the region's exports.
The region’s foreign trade is expressly export
driven. Export accounts for 70.7% of the total
China
commodity turnover while import totals 29.3%.
The Sverdlovsk Region differentiates its export
Technologies both geographically and by product type,
thereby lowering its general exposure to market
fluctuations.
People
The Sverdlovsk Region is a large importer
Information of high-tech products. Each year, it imports
machine-building products worth around EUR 2
billion.
Investment
Sverdlovsk Region partner countries
Finland, Hungary, Bulgaria, Slovakia
Spain Sverdlovsk Region partner regions
Baden-Wurttemberg (Germany), Rheinland-Pfalz
Netherlands (Germany), Liguria (Italy), Piemonte (Italy),
Carinthia (Austria), Baria-Vungtau (Vietnam),
Switzerland Sinczyan-Uigur Autonomous District (China)
Sverdlovsk Region partner city
Harbin (China)
Ekaterinburg partner cities
Genoa and San Remo (Italy)
More than 20 representatives
of foreign diplomatic missions
PwC | Sverdlovsk Region | 19

20. 20 | Guide to investment | PwC

21. Research and innovation capacity of
the Sverdlovsk Region
The Sverdlovsk Region is one of just a few
Russian regions that have retained their high
R&D potential and is a leader among them. The
region has vast innovation resources that can
be used for the production of new high-tech
products that will be competitive in both the
domestic and global markets.
The region’s industrial science complex is made
up of 92 industrial R&D institutes that employ
more than 17 000 people. The academic science
complex comprises 22 institutes of the Urals
Division of the Russian Academy of Sciences.
There are also 32 universities and over 160
large and medium innovative manufacturing
enterprises. More than 30 000 people are
involved in R&D work in the region.
In 2010, the Yeltsin Urals Federal University was
founded on the basis of two old Ekaterinburg
universities. This university is the core of
research and innovation in the Urals Region. In
the Sverdlovsk Region, there are 32 universities
in total (21 of them are state or municipally
owned and 15 of them are non-governmental).
The Sverdlovsk Region has 4 200 educational
institutions of all types, which teach more than
1 million people. The system of secondary
and higher vocational education is also well
developed.
PwC | Sverdlovsk Region | 21

22. Human resources
Economically active population
The Sverdlovsk Region has a population of 4.5 2343 thousand people
million, of which 83% live in towns and 17%
reside in rural areas. People who are 30 to 49
years old comprise the largest portion of the
workforce in the region (56.3%). Almost one Doctors of Science 1000
fourth of the total workforce (24.9%) is made up
of young people from 15 to 29 years of age, and
the average age of the region’s workforce is 39.
PhD 5000
The Sverdlovsk Region’s workforce is highly
educated, which is an important condition for
increasing production efficiency as a whole and State Universities 19
creates opportunities for attracting high-tech
investment projects to the region. The region
places great importance on training specialists
for important investment projects; it sets up Scientific and research
training centres, re-trains teachers and develops organizations 138
educational programmes to meet the demand for
any skill or profession.
22 | Guide to investment | PwC

23. Special
economic zones
in Russia
PwC | Sverdlovsk Region | 23

24. Background SEZ residents are protected from unfavourable
changes in Russian law, i.e., if Russia’s federal or
Russian Government Resolution No. 1032 of regional laws or any other regulatory acts worsen
16 December 2010 created an industrial and the position of SEZ residents, then they should
manufacturing special economic zone in the not be applicable until the area loses its SEZ
Verkhnesaldinsky City District Municipality of status. It is important that the time period of this
the Sverdlovsk Region in pursuance of Federal guarantee coincides with the period of the SEZ’s
Law No. 116-FZ of 22 July 2005 “On special existence. This guarantee also covers changes
economic zones in the Russian Federation”. in tax and customs requirements, which is very
important for any business in Russia, where such
Russia has 24 special economic zones (SEZs) of four
changes occur rather frequently.
types: industrial (4), innovative (4), tourist (13)
and port and logistics (3). In the Urals and Siberia, Only those investors who have obtained their
there is just one industrial and manufacturing SEZ, status as an SEZ resident are entitled to these
located in the Sverdlovsk Region. As of 1 January exemptions and preferences. SEZ residents
2011, 257 investors were registered in SEZs. Twenty- must make a capital investment in roubles in an
three more companies have obtained approval of amount equivalent to no less than EUR 3 000 000
their projects from the Expert Boards and will soon (except for intangible assets) using the Central
enter into contracts on operating in the SEZ. Thirty- Bank of Russia exchange rate as of the day on
one residents operate in the industrial zones, 195 which the application for concluding a contract
entities in the innovative zones and 31 companies in on manufacturing and industrial operations
the tourist zones. in the SEZ was filed with the SEZ managing
Federal Law No. 116 of 22 July 2005 “On special bodies. SEZ residents must also make a capital
economic zones in the Russian Federation” investment in roubles in an amount equivalent
establishes a special regime of operating to no less than EUR 1 000 000 (except for
within an SEZ that provides a special system of intangible assets) within a year of concluding the
benefits and preferences for its residents. The above contract.
key advantage of an SEZ is the predictability of
expenses (administrative, tax, resource, etc.) for After their registration in the SEZ, residents
investors doing business there. can lease a plot of land with a complete
engineering and transportation infrastructure
Among an SEZ’s other advantages are: that significantly reduces expenses on the
• a special tax regime; construction of their production facility. The
• a special customs regime; plot of land can be bought out later. In addition,
• special rates for lease and purchase of land SEZ residents are given an opportunity to use
and connection to infrastructure networks. an accelerated depreciation method with a
coefficient of two and an accelerated R&D
Simplified administrative barriers are an expense recognition approach.
advantage available to those who set up
production within an SEZ. Investors also like Extraction or development of mineral resources,
to see that there are fewer examinations. processing of non-ferrous or ferrous metals and
Examinations are carried out solely to the production of excisable products (except for
extent required to assess project solutions from light cars and motorbikes), weapons or military
a health and safety perspective with regard to equipment are not allowed within the SEZ.
buildings, structures and individual designs It is also prohibited to have housing facilities
and their compliance with the approved urban within the SEZ. Industrial and manufacturing
planning documentation. The timeframe zone residents do not have the right to engage
of the examination and approval of project in any activity other than that provided in the
documentation for investment projects investment project. SEZ residents also do not
suggested for implementation in an SEZ has been have the right to have representative offices or
significantly reduced to 45 days. branches outside the SEZ.
24 | Guide to investment | PwC

25. Industrial
and manufacturing
special economic
zone in the
Sverdlovsk Region
PwC | Sverdlovsk Region | 25

26. 26 | Guide to investment | PwC

27. Location and infrastructure Cities of the SEZ
The SEZ is located beteen Verkhnaya Salda and Verkhnaya Salda was founded in 1778. It
Nizhny Tagil, two of the Sverdlovsk Region’s covers 7 000 hectares and has a population of
largest cities. It is also in close proximity to CJSC 51 000. The city is 176 kilometres away from
Ural Boeing Manufacturing, a US-Russia venture, Ekaterinburg, and its principal industries are
and VSMPO-AVISMA Corporation OJSC, the mechanical engineering, metals and related
world's main producer of titanium and titanium mining industries.
products and a supplier of titanium components
for Airbus, Boeing, General Electric, Goodrich, Verkhnaya Salda is home to several universities
Embraer, Rolls Royce, Safran, etc. and technical vocational schools, including the
Verkhnaya Salda Branch of the Ural Federal
The scope of the SEZ’s industrial priorities University. The total number of students
covers aircraft engineering, production of attending educational institutions there is 4 700,
components for the aerospace and auto with about 1 180 graduates every year. To meet
industries, metalworking, tool engineering, the the needs of the SEZ’s residents, the government
machine tool industry, mechanical engineering, is establishing the Territorial Training Centre for
the robotics industry, microelectronics, and technical specialists on the basis of the Yeltsin
chemical production, including pharmaceuticals, Ural Federal University.
composite materials, medical products, etc.
PwC | Sverdlovsk Region | 27

28. Nizhny Tagil was founded in 1722. Its territory The educational infrastructure of these two cities
covers 4 106 square meters and has a population neighbouring Titanium Valley has the necessary
of 37 500 people. Nizhny Tagil is located 146 basis for training in-demand professionals.
km away from the city of Ekaterinburg. Its Verkhnaya Salda has a professional vocational
major industries are the mining, mechanical school for skilled workers, a college for highly
engineering, metals, energy and food industries. qualified personnel and a branch of the Ural
Federal University for engineers with university
degrees. In addition, there is the Nizhny Tagil
Technological Institute (a branch of the Ural
Federal University), E.A. and M.E. Cherepanov
Nizhny Tagil Mining and Metallurgical College,
Demidov Nizhny Tagil State Professional College,
Polytechnic Gymnasium, etc. The city is also
home to the Nizhny Tagil Institute of Metal
Testing. The institute is capable of providing
for a laboratory base for applied research to be
conducted by potential SEZ residents.
28 | Guide to investment | PwC

29. Transportation advantages railway line links the SEZ with the Nizhny
Tagil-Alapaevsk highway and Smychka railway
Titanium Valley provides SEZ residents with station, which provides access to all of Russia's
easy access to rail and motorway transportation main railroads. Salka Airport, which is ready
to destinations throughout Russia and around for use by the SEZ’s future residents, is just 20
the world. The R-353 motorway near Nizhny kilometres from the SEZ. Ekaterinburg-based
Tagil connects the SEZ to the city and the entire Koltsovo International Airport offers flights to
Russian transportation network. A separate destinations around the world.
PwC | Sverdlovsk Region | 29

30. Customs benefits and preferences An important advantage of the SEZ is that
products manufactured there using goods
Under Article 6, Part 4 of the Federal Law “On produced abroad and goods from the Customs
Special Economic Zones”, the Sverdlovsk Region Union (Russia, Kazakhstan and Belarus) can
Administration and the Administration of the be exported by SEZ residents to Russia and the
Verkhnaya Salda City District of the Sverdlovsk Customs Union without VAT and duties until
Region ensure the due adoption within their 1 January 2017 (if a company is registered in
powers of legal acts and regulations establishing the SEZ before 1 January 2012), or outside the
the following tax benefits for SEZ residents by 30 Customs Union without VAT and customs duty,
July 2011: provided the goods were sufficiently processed in
the SEZ.
Residents are entitled to independently choose
Type Current Tax rate criteria for the sufficient processing of goods,
of tax tax rate in the SEZ which can include the following:
in Russia
• Changing the classification code of goods
under the Unified Product Range of the
Corporate 20% 15.5% 10 Customs Union’s foreign trade activity at the
years level of any of the first four digits
years
profit tax
• Meeting the required conditions, executing
production and technological operations
Corporate 2.2% 0% 10 sufficient for qualifying goods produced
years
years using foreign-made goods placed under the
property tax free customs zone customs procedure as the
Customs Union’s products
Land tax 1.5% 0% • Changing the value of goods when the
percentage of the value of materials used or
the added value reaches the fixed percentage
in the finished product's price (normally, the
Transport tax 7-15% 0% ad valorem percentage)
(roubles per
unit of horse An SEZ resident company can apply a multiplying
power) ratio of two to the main statutory limit of
depreciation charges for property, plant and
equipment. It is entitled to treat R&D expenses as
deductible, including those that did not produce
The SEZ offers a free customs zone regime, under a positive result, in the total amount of actual
which foreign-made equipment and components costs incurred in their reporting (tax) period.
can be imported for free, i.e., value added tax on
imported foreign goods will be 0% and import The Sverdlovsk Region Administration is
customs duty will not be charged. considering granting subsidies to investors (SEZ
residents) to reimburse profit tax costs related to
payments to the Russian constituent’s budget at
13.5%, with over RUB 1.5 billion in total capital
investments into the project for a pay-off period
of less than 10 years.
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31. Procedure for obtaining Conclusion
SEZ resident status
The Russian economy is becoming more and
To obtain SEZ resident status, corporate investors more accessible to the world. The growing
will need to: domestic market, rich mineral resources, vast
scientific and production potential, political
and financial stability have combined to
1. sign a letter of intent with the make investment in Russia more attractive by
Sverdlovsk Region Administration; creating the possibility of long-term business
development.
2. develop a business plan for the project
based on the criteria established by The Sverdlovsk Region has been witness to a
the Russian Ministry of Economic great deal of work on establishing and improving
Development; the conditions necessary for doing business and
making investments. With its high standard of
3. generate a request for a company to be living, powerful production facilities, and well-
assigned SEZ resident status and developed business and logistic infrastructure,
register a legal entity in the Verkhnaya the region is a shining example of Russia’s
Salda City District; modern and upgraded economy.
4. undergo the investment project Today, as an industrial centre of Russia, the
approval procedure at the SEZ Expert region is a very attractive potential market with
Council meeting; unlimited opportunities. Having a presence
in the region provides for successful business
5. sign an agreement on conducting growth both in and outside of Russia for many
production and industrial activity in years to come.
the SEZ with the SEZ’s operator, who
will provide all necessary support for As prescribed by the Strategy for the Sverdlovsk
communication among the residents Region’s social and economic development
with regard to SEZ matters. through 2020, one of the main tools for
achieving sustainable economic development
in the region is the establishment of institutions
like SEZs at a regional level, namely production
and industrial SEZs and high-tech enterprises
based on OJSC VSMPO-AVISMA Corporation in
Verkhnaya Salda. The establishment of an SEZ
in the Sverdlovsk Region is a critical step toward
ensuring a comfortable environment for investors
in this key Russian region. Today we can also
affirm that making investments in SEZs is the
best way of contributing to the Russian economy,
which is characterised by sustainable post-crisis
growth, increasing consumption of one of the
world’s densest markets (Russia’s population is
141 million people and 281 million people live in
its neighbouring states) and the world’s third-
largest gold and currency reserves.
PwC | Sverdlovsk Region | 31

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33. PwC | Sverdlovsk Region | 33

34. Contact details:
Sverdlovsk Region Administration PwC Ekaterinburg
Sverdlovsk Region Ministry Senat Business Centre 7A, office 301,
of Investment and Development Gorkogo Ul.
1 Oktyabrskaya Pl. Ekaterinburg, Russia, 620075
Ekaterinburg, Russia, 620031
Phone: +7 (343) 253 1433
Fax: +7 (343) 253 1430
Mikhail Maximov
Minister of Investment and Development
Maxim Matsiborko
Managing Partner
Sverdlovsk Region Ministry of E-mail: maxim.matsiborko@ru.pwc.com
International and
Foreign Economic Relations
1 Oktyabrskaya Pl.
Ekaterinburg, Russia, 620031
Alexander Kharlov
Sverdlovsk Region Minister of International
and Foreign Economic Relations
Phone: +7 (343) 217 8672
Fax: +7 (343) 217 8907
r66@midural.ru
Andrei Sobolev
Head of Foreign Trade and Investment,
Sverdlovsk Region Ministry of International
and Foreign Economic Relations
Phone: +7 (343) 217 8908
Fax: +7 (343) 217 8907
sobolev-ao@midural.ru
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35. PwC | Sverdlovsk Region | 35

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