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Prime Minister Mikhail Mishustin arrived in the Kuril Islands with new proposals for attracting investors to the local economy, outlining for now a general concept – the final decisions will be made after discussing them with the president. The government proposes to develop the logic of preferences provided for in the territories of advanced socio-economic development (TOP) – to accelerate the development of the Kuriles, the introduction of a free customs zone regime on the islands, as well as the exemption of investors from part of taxes, is being discussed.

Prime Minister Mikhail Mishustin’s visit to the Far East began with a visit to the southern Kuril island of Iturup. As usual, the arrival of high-ranking Russian officials in the Kuril Islands provoked a protest from Tokyo, where the four islands of the Kuril ridge are considered controversial – during one of such visits, then-Prime Minister Dmitry Medvedev answered the Japanese side that this was Russian territory. This time, there was no reaction from Iturup – that Russia does not accept Japan’s protest, the Foreign Ministry said in Moscow.

Mikhail Mishustin also spoke about the approaches to the concept of economic development of the Kuril Islands. Recall that “unique and unprecedented” proposals for involving Japan in the economic activities of the Kuril Islands were announced by Vladimir Putin last week, without specifying which measures were being worked out – the president only noted that he had said about the development of such proposals in order to “intrigue participants in economic activity.” … The intrigue, however, remained – as follows from the statement of Mikhail Mishustin, while what he was talking about remains in the status of proposals, and the final decisions will be made after the prime minister returns to Moscow and reports to the president.

In particular, the White House proposes to extend the free customs zone regime to all the Kuril Islands (the possibility of importing goods without paying customs duties and taxes, as well as without applying non-tariff regulation measures with respect to foreign goods) – this, the Prime Minister noted, is important to do in order to ensure that help businesses import the necessary equipment and other goods. So far, in the Kuril Islands, this regime is applied only within the territory of priority socio-economic development “Mountain Air” in a very limited area of ​​the island of Shikotan. Other government proposals are also largely reminiscent of the already existing TOR regime, and in the absence of detail, the White House ideas look even a little more interesting for business.

So, as Mikhail Mishustin said, the authorities are considering the issue of exempting enterprises that invest in the local economy (with the exception of companies that are engaged in financial intermediation activities, as well as the production of excisable goods and the catch of valuable biological resources) from paying part of taxes, including on profit, property, land and transport taxes, and VAT. For comparison, residents of the Kuril ASEZ have the right to a five-year zeroing of the 2 percent federal part of income tax with a decrease in the 18 percent regional rate to at least 5%, zeroing property tax (from a rate of 2.2%), as well as zeroing in the first three years of land tax (as a general rule – 1.5%).

It is also proposed to keep the reduced rates of insurance premiums at the level of 7.6% instead of 30%, which are paid by companies as a general rule – now the residents of the TOP have such a privilege for ten years from the date of obtaining such a status (if it is received by the end of 2025) … The possibility of exemption from taxes on personal income in the Kuril Islands is not being considered. At the same time, Mikhail Mishustin warned, the Kurils “cannot be turned into an offshore”, as it was in the 1990s, when “internal offshores were created not to invest in the territory, but to minimize aggressive taxation.”

In general, the prime minister expects that the set of measures being developed may be “a good solution for investors, including Western ones, for the same Japan, which, if interested, can create jobs here.” The Japanese side has so far reacted to the development by the Russian government of measures to attract investment to the Kuril Islands rather restrainedly – as Secretary General of the Cabinet of Ministers Katsunobu Kato noted on Monday at a press conference, Tokyo has been attentive to the statements of the Russian authorities, but for now they intend to “refrain from guessing” about the content of the discussed measures. Although, he added, on the issue of joint economic activities in the Kuril Islands, the Japanese authoritieslead“Active negotiations with the Russian side on how to carry it out without violating the legal positions of both countries.”

Source: Kommersant

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.

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