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Preferential competition

Why companies-subsoil users of the Far East are in no hurry to obtain the status of a RIP

New measures to support regional investment projects (RIP) were adopted on the initiative of the Ministry of Economic Development of Russia 1 January 2017. The preferential taxation for both profit tax and mineral extraction tax (NDPI) can be taken advantage of projects implemented in the Far Eastern and six regions of the Siberian Federal District under certain conditions. At the same time, many companies-subsoil users, having the right to receive the status of RIP, did not use it, and do not plan to do it. The main reason for this situation is the availability of alternative preferential regimes operating for subsoil users of the Far East within the special economic zones (SEZ), the territories of advanced development (TOP) and the Free Port of Vladivostok. In which regions do subsoil users prefer RIP benefits, and in which other privileged regimes, how do the benefits "compete" among themselves, and what factors prevent the receipt of the RIP status by individual enterprises of the Far East, clarified EastRussia.

Preferential competition
First of all, to obtain preferential taxation in the status of RIP, it is necessary that "Income from the sale of goods produced as a result of the RIP, amounted to at least 90% of all revenues recorded when determining the tax base for the tax in accordance with Ch. 25 Tax Code of the Russian Federation ". In this case, the amount of the tax rate will be 0% for the tax to be credited to the federal budget (it is applied in the manner provided for Item 2 Art. 284.3-1 Tax Code of the Russian Federation), from 0% to 10% during five tax periods for the tax to be credited to the budgets of the subjects of the Russian Federation (the rate is set by the authorities of each entity, starting from the tax period in which, in accordance with Item 2 Art. 284-3 Tax Code begins to apply the tax rate provided for Item 1.5-1 Art. 284 Tax Code of the Russian Federation) and however 10% for the next five tax periods. 

The Republic of Sakha (Yakutia) became the absolute leader among the subjects of the Far Eastern Federal District in terms of the number of subsoil companies that have the status of the RIP. At its territory, six investment projects are included in the register of the RIP: OOO Elgaugol, OOO Ryabinovoye, OOO Tompo-Aurum, JSC Tarynskaya Zolotorudnaya Company, OOO Artel Starateley Drazhnik, OOO Duet Mine . Another investment project, OOO Zoloto Ynykchana, received RIP status in a declarative manner. As noted in the Ministry of Investment Development and Entrepreneurship of the Republic of Sakha (Yakutia), no investment project that applied for the status of the RIP, has received a refusal.
The Kamchatka Territory and the Sakhalin Region shared the second place in terms of the number of RIPs. In Kamchatka, three companies have this status - JSC Ametistovoe, JSC Kamgold and JSC Siberian Mining and Metallurgical Alliance. There are no more mining projects in this region that could qualify for the benefits of the RIP, but did not exercise their right, - noted the Ministry of Economic Development and Trade of the Kamchatka Territory. On Sakhalin, the list of RIPs includes two enterprises: LLC Boshnyakovskiy coal mine and LLC Nikolsky Kamen. Ministry of Economic Development of the Sakhalin Oblast.
The owners of the "bronze" were the Khabarovsk Territory and The Jewish Autonomous Region, having in their assets one enterprise, which entered the register of the RIP. In the mining industry of the Khabarovsk Territory, the status of the RIP since 2015 has a subsidiary of Polymetal JSC - Svetloye LLC, was told in the regional Subsoil Management Department of the Ministry of Natural Resources of this entity. This enterprise was included in the register of the RIP in 2015 year, as well as LLC "Kimkano-Sutarskiy ore mining and processing enterprise" located in Jewish autonomous region. In addition, as reported in the Office of Government Economics Jewish autonomous region, another enterprise - "Resources of Small Hingan" Ltd., claims to receive benefits as a participant in the RIP.
At the same time, there are no enterprises with RIP status on the territory of four subjects of the Far East - Magadan Region, Chukotka Autonomous District, Primorsky Krai and the Amur Region, although many could obtain it. What prevents subsoil users from doing this?

In the Magadan Region, instead of the privileges set by the RIP, subsoil companies prefer to use the preferential tax and customs regime of the SEZ.
- SEZ participants have a privilege to pay mineral extraction tax in the share that is payable to the federal budget, they have customs privileges, and therefore they do not need to meet the strict criteria for RIP participants, - explained EastRussia in the Ministry of Economic Development of the Magadan region. At the moment 21 enterprise-subsoil user is a participant in the SEZ.
In the Magadan Region, there are projects that could qualify for RIP benefits - for example, gold-mining factories at the Pavlik and Natalka fields - but did not take advantage of this right. In the Ministry of Economic Development of the region believe that the receipt of the status of RIP in this case is hampered by sufficiently strict requirements for RIP participants and to the investment projects themselves.
In particular, the terms require that land plots be leased before the year 2024, free of buildings belonging to any legal or natural persons. Also, the share of new products from the implementation of a new project in the company's revenue should be at least 90%. In addition, the company must strictly comply with the terms of the license agreements, because in the event of a violation, all the funds received under tax incentives are subject to return to the budget with penalties.
In the Chukotka Autonomous Okrug there are no organizations that have the status of a participant in the RIP included in the register of RIP participants. This is due to the fact that in the list of goods produced by potential participants in the register, there is no mining of gold and silver, and these enterprises in the region are the majority.
"At the same time, large gold mining companies can take advantage of the benefits of the participants in the RIP, for which there is no need for inclusion in the register, having fulfilled the conditions established by the Tax Code," the Governor's Office and the Government of the Chukotka Autonomous Okrug explained in the information policy department. To date, only one gold and silver mining company in the district has managed to obtain the status of a participant in the RIP, for which no entry is required in the register.
At the same time, there are two other categories of taxpayers in this region, which have a wider "package" of benefits. They are residents of the TOR "Beringovsky" and residents of the Free Port of Vladivostok (Pevek city district), which may include mining companies. For these categories, in accordance with federal and regional legislation, except for the benefits of paying income tax and MET (as well as for participants of the RIP), there are privileges for paying the property tax, land tax, and reduced insurance premium rates. Taking into account these more favorable tax conditions, the status of the resident of the TOR "Beringovsky" is currently received by a large company engaged in the production of coking coal at the Amaam field, a company engaged in gas production, and companies that develop gold and silver deposits.
Investment projects implemented in the Primorsky Territory are also in no hurry to acquire the status of the RIP, the regional department of natural resources and environmental protection said. Despite this, with the initiators of investment projects that became residents of the Free Port of Vladivostok, the administration of Primorsky Krai within the framework of the Eastern Economic Forum in 2016-2017 signed agreements on the establishment of three enterprises. This list includes production of extraction and processing of natural marble in the Olginsky region with an investment of 499,876 million rubles, a project for the production and sale of crushed stone near the town. Zavodskaya, Artem with an investment of 297,84 million rubles and the creation of crushed stone production on the basis of the Vishnevoe building stone deposit in the Spassky municipal district with an investment of 300 million rubles.
There are no organizations included in the register of RIP participants in the Amur Region, just as there are no mining projects that could qualify for RIP benefits. In addition, no special investment contracts were concluded on the territory of this subject of the Far Eastern Federal District, the Ministry of Economic Development of the Amur Region reported.
Thus, the RIP status does not in all cases give advantages to companies-subsoil users of the Far East in comparison with other current preferential tax regimes. But, as is known from the laws of the economy, competition is the driving factor in the development of any market. And in this case we are dealing with a competition of benefits, the emergence of which is beneficial for the economy of the Far Eastern regions, since market participants have the opportunity to improve the efficiency of their projects by choosing the best concessionary terms for them.
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