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Benefits - will

If the business will keep its promises

It is not difficult to get the preferences of TOP and Free Ports without problems of this or that company today. Since mainly from business you only need to lead an honest business and honor your promises.

Benefits - will

Pavel Kondukov

Director of the Department of Taxation and Law of KPMG JSC
Special project TORA and Free Port

The Network of Advanced Development Territories and Free Ports in the Far East has been created and even expanded. But the questions about how not to face pitfalls, participating in programs of state support of business along the lines of the Ministry of Economic Development of Russia, still want to use new mechanisms. 

According to Pavel Kondukov, Director of Taxation and Law Department of KPMG JSC, With participation in the TOR and Free Ports regimes today, business risks are minimized. The relevant legislation regulates in great detail the interaction of the state and investors; The level of detail is such that the business can really feel protected. Of course, due to a lack of law enforcement practice, it is still difficult to give concrete examples from real life, but there should be no "surprises" in case of bona fide activities, the expert is sure.

"Investment regimes of the TOP and Free Port of Vladivostok currently provide the largest amount of preferences for investors. The main conditions for granting these preferences are named in the same laws and agreements on the implementation of activities (investment agreements). The main thing for the investor (resident) is to fulfill the obligations stipulated in these agreements, and, above all, to carry out the activities specified in them, and also to invest in the volume and within the terms provided by this agreement. In this case, investors as a whole must also comply with the requirements of Russian law. "

According to him, given the special legal regime for investors in the Far East, as well as the practice of applying other investment regimes in Russia, the investors have created the most favorable legislative conditions. At the same time, the Ministry of Regional Development of Russia continues to work towards further improvement of these conditions. This ministry directly approves planned and unscheduled inspections conducted by state regulatory bodies with respect to residents. But even if the difficulties with the implementation of legislation from companies arise - for example, within the framework of certain monitoring activities - a specialized structure - the Corporation for the Development of the Far East - will come to the aid. The managing company of the TOR and the Free Port is called upon not only to monitor the investor's compliance with the terms of the agreement, but also to provide legal assistance to the investor in court in case of claims from the state supervisory bodies. At the same time, the expert notes that as such a court should not be afraid - as practice shows, if business does everything in accordance with the investment agreement and the current legislation, then the court is on its side.

“With the help of the same Far Eastern Development Corporation today, a simplified procedure and speed of business of companies in the territory of TDD and Free ports is provided, as the Corporation is also called upon to help residents overcome administrative barriers and difficulties in applying Russian legislation that foreign investors often face. For example, in relation to residents of the PDA, it performs the functions of a multifunctional center for the provision of public services; organizes the provision to residents of services necessary for carrying out activities in it, including legal services, for accounting and customs clearance; ensures the functioning of infrastructure facilities, ”added Pavel Kondukov.

At the same time, he drew the attention of the EastRussia correspondent to the fact that, despite the widespread opinion about Russian legislation as a rigid legal code, in fact, the possibilities and conditions for government intervention in business within the framework of PDA and Free ports are limited. That is, much has been done to ensure that residents do not interfere or intervene only to the minimum extent necessary.

Speaking directly about the nuances of entering the TOP, Pavel Kondukov noted that a legal entity wishing to implement it must be registered on the territory of the TOP or the Free Port. In other words, if a person is not registered in these territories, then he cannot become their resident. At the same time, as far as the Free Ports are concerned, with regard to them, the Government indicated that in order to obtain the status of a resident, an investor must implement a new investment project or the types of activities he performs must be new.

"In turn, in practice, an investor or several investors often create a separate legal entity that is registered in these territories, which makes it possible to exclude possible criticism from the management company or state supervisory bodies in the future," Pavel Kondukov explained.

According to the expert, if we talk about separate tax accounting, the legislation on taxes and fees imposes on the resident such a duty only if the resident, in the course of his primary activity within the framework of the business agreement, receives income (carries expenses) from other activities. It should also be remembered that, in order to apply preferential rates for the profit tax, the income of the resident in the core business should be at least 90 percent of all revenues recorded when determining the tax base for income tax.

In turn, he gave some explanations to the EastRussia correspondent regarding another benefit provided by the TOP regime - the possibility of duty-free import of equipment from abroad. According to him, it is difficult to estimate the specific cost required for its organization. The answer to this question must be formulated in relation to a specific resident and his project. But what can be said for sure is that here the resident will have to carry out a large number of administrative actions to fulfill certain requirements. That is, you need to spend a lot of time and organizational effort.

At the same time, referring to the reverse side of the regimes created in the Far East - potential abuses, Pavel Kondukov pointed out that the main one is not the implementation of the activities stated in the agreement on the implementation of activities and the formal registration of a legal entity to receive tax benefits. However, according to him, the Russian legislation and law enforcement practice have already passed these cases on the example of free economic zones and other regimes that existed in the 90-s in the form of internal offshore companies. Now, during the existence of TOR and Free Ports, the legislation is formulated more clearly, the Far East Development Corporation and the controlling state authorities are called upon to monitor compliance with this requirement. The Ministry of Eastern Development also carries out general supervision over the implementation of such projects. That is, legislative conditions have been created that prevent the appearance of fraudulent schemes. However, to completely exclude this possibility is of course impossible.
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