RS Brief news The Special Economic Zone gives the go-ahead for the recycling of raw materials

The Special Economic Zone gives the go-ahead for the recycling of raw materials

September 2013

The federal law "On special economic zones" now enables resident companies to get involved in recycling raw materials (with the exception of hydrocarbons - raw oil and gas). The aim of this new measure is to take away the restrictions with regard to the processing of useful raw materials within the Special Economic Zone, something that is particularly topical for the Far East of Russia and Transbaikal. At present the economy of these regions is focused mainly on the extraction and use of fossil fuels, whilst only a small share of the market is taken up by recycling processes. At the same time, the remoteness of the Far Eastern Region and Transbaikal, uneven transport infrastructure and limited access to the common energy market are leading to growth in production costs, which results in production being less competitive. These factors, and others, are making it difficult to attract investment to the creation of production systems with high added value. RS

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Under the Russian legislation, the special economic zone (abbreviated as SEZ) is a restricted area with a special legal status and financial incentives for investors from Russia and overseas. Companies residing in the SEZ can make use of the following tax breaks:

  • tax "holidays" — partial or full exemption for investors from having to pay taxes on their assets and property, VAT, etc.
  • partial or full exemption from import dues on semi-finished goods, raw materials etc. imported for use inside the zone;
  • partial or full exemption from export dues on products manufactured inside the zone;

  • investment subsidies, government exemption loans, reduced tariffs on utilities and rent costs for production facilities.