Trutnev: Preferences will apply to entire Arctic zone
A package of legislation aimed at an infrastructure support system for projects in the Arctic has been drafted and submitted to the government, Deputy Prime Minister Yury Trutnev said at a meeting on preferences for the Arctic zone.
"Under the new legislation, preferences will apply to the entire territory of Russia's Arctic zone, and any new project worth at least 10 million rubles will be entitled to state support. We organized Arctic projects into five groups: offshore projects; construction of LNG and gas processing and chemical plants; greenfield oil development in Eastern Arctic; solid minerals projects; and non-mining projects including small and medium-sized businesses. Each of these groups will be entitled to its own set of benefits," Trutnev said.
Offshore projects will enjoy a lower mineral extraction tax (MET) of 5 percent over 15 years of industrial production, he added. The MET for LNG and gas chemical projects will be 0 percent for 12 years from the date of delivery of the first products. The regions will be also authorized to reduce their share of income tax. The mineral extraction tax on new oil fields in Eastern Arctic is planned at 0 percent for 12 years with a gradual increase in the rate between years 13 and 17. For solid minerals projects, MET benefits will equal the amount of their investment in infrastructure. For non-mining projects, including small and medium-sized businesses, the plan is to reduce the federal share of the income tax to zero for 10 years, provided that the region also cuts its share of the tax. Lower social security contributions will apply to new jobs in non-mining projects (7.6 percent instead of 30 percent). "But this preference will work differently than in the Far East," Yury Trutnev pointed out, adding that, regardless of the type of project, a company resident in the Russian Arctic zone will be entitled to a free customs zone regime and immunity from unnecessary inspections.
The meeting participants discussed infrastructure support for investment projects. "An important part of the support system is encouraging the construction of infrastructure. The Arctic Commission will consider this topic at its meetings. We are going to support projects by building roads, power lines and other necessary infrastructure. The selection rules for infrastructure support of such projects have been developed and are awaiting signature by the Prime Minister," said Yury Trutnev.
The proposal to have a system of preferences for solid minerals processing projects was considered. "This proposal seems the right thing to me, because we are interested in the subsequent processing of the minerals mined," Yury Trutnev said, instructing the Ministry for the Development of the Russian Far East and Arctic to consider the issue.
According to the Deputy Prime Minister, the work on a system of preferences for investors working in the Arctic zone has not been completed and will continue. "These laws will not be the last acts adopted to create this system of preferences. Rather, we are just beginning to create the right conditions for investors to come in, to launch and implement investment projects in the Arctic zone of the Russian Federation. We will improve the legislation in the interests of developing the national economy," he explained.
According to the Deputy Prime Minister, the new legislation will help improve the quality of life in the Arctic. "Unfortunately, the life of all people in such a vast territory is unlikely to improve overnight. But those people who are active, who want to develop their local economies, to do business, will certainly get new opportunities. New investment projects will definitely create additional jobs," Yury Trutnev said.
The meeting participants also discussed a proposal to reduce the investment threshold at which non-mining projects, including small and medium-sized businesses, become entitled to preferences. "The proposals were 1 million rubles and 3 million rubles. One of these proposals will most likely be accepted. We are ready to lower the threshold. This will create opportunities to build gyms, bakeries, and a variety of small and medium-sized business projects," the Deputy Prime Minister said.
The meeting was attended by Minister for the Development of the Russian Far East and Arctic Alexander Kozlov, Deputy Minister Alexander Krutikov, heads and representatives of the Arctic regions: Governor of the Chukotka Autonomous Area Roman Kopin, Governor of the Yamal-Nenets Autonomous Area Dmitry Artyukhov, Governor of the Arkhangelsk Region Igor Orlov, head of the Republic of Karelia Artur Parfenchikov, Governor of the Krasnoyarsk Territory Alexander Uss, Governor of the Nenets Autonomous Area Alexander Tsybulsky, Governor of the Murmansk Region Andrei Chibis, head of the Government of the Republic of Sakha (Yakutia) Vladimir Solodov, First Deputy head of the Government of the Komi Republic — Chief of Staff of the Head of the Republic of Komi, Mikhail Poryadin; representatives of the government, federal and regional authorities, development institutions of the Far East and the Arctic.