ministry of industry and trade of russian federation...
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Ministry of Industry and Trade of Russian Federation
(MINPROMTORG Russia)
Special investment contract as a government package of economic
benefits to investors localizing industrial production in Russia
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- Decree of 16.07.2015 № 708 -special investment contractoperating mechanism
-Decree of 31.07.2015 № 719 –criteria to define a product as havingno analogs produced in RussianFederation («MADE IN RUSSIA»criteria)
- Decree of 24.07.2015 № 751 -criteria to define comparingconditions for industrial activities inRussia and abroad
- Decree of 31.07.2015 №779 – industrial cluster policy
- Decree of 04.08.2015 №794 – industrial park policy
Decree of 25.07.2015№757 established theGovernment system ofindustrial information andits operating principles
The Government decree of 19.06.2015 № 608 defined Russian Ministry of industry and trade as the public
authority responsible for industrial policy
Policy on industrial
development of territories
Amendments to legislation
Authorized government
body for industrial policy
Industrial activity in
Russia
Government system of industrial
information
Legislative basis “The Federal law of
31.12.2014 №488-FZ on industrial
policy in Russia”
Federal law of 13.07.2015 № 249 amended the Federal law № 223 (on procurement)
Amendments (in the State Duma) to the Tax Code (confirms the “grandfather
clause” for investors in Russia)
Amendments (in the State Duma) to the Federal law № 44 (on
procurement)
Recent amendments to the federal legislation that established legal foundations for the Special investment contract
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Special investment contract in a nutshell
Special “tax haven” regime for investors in Russian industrial and technologysector established by federal, regional and municipal authorities
Flexible mechanism aimed at balancing strategic priorities of the governmentindustrial policy and interests of industrial and technology investors
Clear written long-term “rules of the game” guaranteed to investors byRussian government
Special investment contract is a unique Russian government tool to boost financial attractiveness of Russian industrial and technology sector for
investors that move production or transfer technology to Russia
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Special investment contract
Federal authorities Provide Investor with access to land and infrastructure, cut or lift federal taxes and provide direct financial support (e.g. R&D)
Regionalauthorities
Provide Investor with access to land and infrastructure and
cut or lift regional taxes
Facilitate and support Investor’s municipal activities according to municipal mandate
Municipal authorities
All necessary conditions and clauses put by the
government authorities and investor in the Special
investment contract (in accordance with the Decree of the Russian Government
of 16.07.2015 № 708)
Investor
obligations:• Establishing production facility in Russia• Establishing industrial or technology
partnership or joint venture with a Russian industrial or technology company to transfer technology to Russia
• Launching production of specified in the Special investment contract products in Russia
• Launching R&D activities in Russia or with a Russian partner
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The Russian Federation
Region in Russian Federation
City in Russian Federation
Investor
Industrial company
Other possible participants(credit, public utilities, etc.)
Public side Private side1. Tax incentives and direct support2. Guaranteed stable business
environment in Russia
1. Acting in accordance with the terms of the Special investment contract signed (meaningful percentage of production and R&D localized in Russia)
Establishing sustainable high-tech production facility in Russia
Localizing production or transferring best available technologies to industrial production facilities in Russia
Increasing industrial production output in Russian industrial facilities (including local content supply chain development)
Developing industrial sectors defined by the government as strategically important
TARGET LONG-TERM EFFECTS
Special investment contract
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Duration(investment project’s payback
period or up to 10 years)
Product(defined as of strategic priority
by Russian government)
Total investment
(more than 11 million EURO)
Project timeline
(resources committed by investor and schedule of localizing production or technology
transferring to Russia)
Incentives requested by Investor (tax exemption, preferences, etc.) that apply to the project through
the duration of the special investment contract
Reporting process (agreed principles and reporting standards to check the fulfilment of obligations by investor and the
government)
SPECIAL INVESTMENT
CONTRACT
1) Documents confirming that the investment project is qualified for the special investment contract (i.e. confirming the above key elements)
2) The list of incentives and government support, which investor requests for the purpose of the special investment contract
3) The list of commitments with respect to the investment project from the investor and other private parties involved in the special investment contract as sides
4) Description of the investment project (amount and timing of planned investments, list of key performance indicators, etc.)
Investor provides:
Special investment contract: Key elements
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Special investment contract: Milestones
Negotiations are held to discuss and fix all
disagreements
The investor signs the special investment contract
The investor decides not to sign the special investment contract
or does not respond
The investor submits a statement of disagreement
The contract is signed by other participants (i.e. all private and
public parties involved)The contract is not signed
The conclusion of the Interagency government commission is sent to the investor for consideration
The Interagency government commission reviews
the documents and issues theconclusion on the application
Ministry of Industry and Tradeprepares a preliminary conclusion,
interacts with the investor if necessary
The investor submits an application for the special investment contract along with
necessary documents
up to 70 working days
up to 10 working days
Within 10 w.d. the applicant selects one of
three options:
Special investment contract: Processing timeframe
ACCORDING TO GOVERNMENT DECREE OF THE 16.07.2015 № 708 minimum time required to process the special investment contract is 90 working days (4,5 months), maximum (in case of negotiations) – 100 w.d. (5 months)
Within 60 w.d. the IC holds a meeting to decide on the
application and as a result issues the conclusion to the Ministry
defining if the application is qualified for the special
investment contract or not
70 w.d.
Within 10 w.d. the Ministry notifiesthe applicant, the Ministry of Finance and other relevant
authorities if the application is qualified by the IC for the special investment contract and sends
them a draft copy of the contract
If the IC did not qualify the application, then the Ministry passes
this information to the applicant
60 w.d
If the applicant does not reply to
the Ministry’s notification
80 w.d.
Within 10 w.d all public side parties of the special investment contract sign it (i.e. the Ministry, regional and municipal
authorities)
90 w.d. or 100 w.d. (in case negotiations took place)
If the applicant does not reply to the Ministry’s notification within 20 w.d. the conclusion of the IC is considered
expired
No obligations from either side
Within 10 w.d. the Ministry holds negotiations with the applicant
together with relevant regional and municipal authorities.
90 w.d.
Signed Special investment
contract
In 30 w.d. the Ministry sends
to the Interagency commission (the
IC) (est. by Decree of 31.10.2015
№ 2213) a preliminary conclusion on
the application (prepared according
to Order of Ministry of 25.09.2015 №
2951) along with the application and
support documents
30 working days (w.d)
1) Sign the draft copy of the special investment contract and send it back to the Ministry, OR
2) Decide not to sign, OR
3) Send the list of disagreements to the Ministry
2) Decide not to sign
1) Sign the finalized version of the special investment contract, OR
Application and support documents sent by
Investor (Applicant) to the Ministry of industry and trade (Ministry) (the
application form was approved by Order of
Ministry of 07.08.2015 № 2288)
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As a result the applicant selects either of two options: