Russia to open Russky and Oktyabrsky offshore zones in autumn

Russia to open Russky and Oktyabrsky offshore zones in autumn

This autumn special administrative regions (SAR) will be opened on Russky island in Vladivostok and Oktyabrsky island in the Kaliningrad region, where a special tax regime for offshore companies will be introduced, the head of the Russian Ministry of Economics Maxim Oreshkin said.

"This regime will be activated in September and October," TASS cited him as saying.

If preferential taxation conditions persist for a period of not less than 10 years, it is expected that the inflow of investments from offshore companies that will be re-registered in SARs may exceed $1 billion.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking to Vestnik Kavkaza, noted that it is not the first project to create offshore companies in Russia. "They had a different name before - 'special economic zones'. These zones had preferential or zero taxation, there were many such experiments in the 1990s, I remember such a zone in Kalmykia and Ingushetia, but they were closed at the insistence of the Ministry of Finance," he reminded.

"Probably the only successful example of a special economic zone with a preferential taxation regime that still exists is the Alabuga industrial zone in Tatarstan. There are no fundamental differences between the old rules and the new rules, so one can expect that after a while this experiment will be also stopped," Sergei Hestanov predicts.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, spoke about the benefits the state intends to receive from offshore companies in Russky island and Oktyabrsky island. "Such zones give companies a legal way to avoid taxation. The state benefits from the fact that companies work in such zones and the region where it is located is being actively develop. For example, Russky island is a unique place, and it would be great if a special administrative region is created there, the growth of industry in this region will be useful both for the Primorsky Krai and for Russia as a whole," he stressed.

"At the same time, the state needs to provide this place with an appropriate infrastructure. South-East Asia is a place where they attract capital with pleasure, and we need to create some special conditions that will show the competitiveness of this zone. Now the only competitive advantage of the island is that this is the territory of Russia. So it is necessary to build an infrastructure, establish communication, provide trading platforms and so on," Yudenkov warned.