Russian State Duma prepared a bill about the elements of offshore zone in Crimea

Crimea Free economic zone

State Duma prepared a bill allowing to introduce elements of an offshore zone in Crimea, said Chairman of the Duma Committee on financial market Anatoly Aksakov at the Yalta International Economic Forum.

According to the MP, the main idea in the framework of the law on free economic zone in Crimea and Sevastopol is to introduce the possibility of creating trusts, which constitute the agreement on trust management of property. But unlike a classic trust management in Russia trust involves the transfer or donation of property in which the rights of the asset are also transferred from the original owner to the trust, explained Aksakov. In this case the right to receive benefits from the assets remains with the original beneficiary, he added.

“First, we will take risks for foreigners. We see foreign interest in Crimea, but they are afraid of sanctions. Second, those Russians who don’t want to open up – they could invest in the Crimea without risks through trusts” — said Aksakov reminding that tax incentives in the Crimea in the framework of the free economic zone are already there.

He also noted that the question on creation of the elements of the offshore area in Crimea in the near future will be discussed with the representatives of the Central Bank, Ministry of Finance and Ministry of Justice. “The bill has already been prepared, but first we’d like to have a discussion on it, and have the support of State agencies”, — concluded Aksakov. According to Head of the Republic Sergey Aksenov, such a measure is necessary for legal format of storing information about investors on the territory of Crimea.

“The proposals came from MPs and members of the Federation Council, as well as from members of the Russian Government to find a convenient one-of-a-kind option which can be applied for the first time in the Crimea. Common understanding is yet to come”, — said Aksenov.

He also said that at present investors can count on his personal guarantees, so that they can be confident that they would not be disclosed. “Knowing who is the real owner and the real representative of the company and what time it takes for the projects to be implemented – I will not insist on the increased level of publicity in respect of such business”, — said Aksenov adding that investors choose the level of openness.

Free economic zone (FEZ) in Crimea and Sevastopol came to effect in January 2015. Its residents do not pay tax on profit of organizations to the Federal Budget, and to the Regional Budget they pay profit tax at a reduced rate: 2% in the first three years, 6% — from the fourth to the eighth year and 13.5% from the ninth year onwards (the standard rate is 17%). Companies are also exempt from tax on property for ten years and three years from land tax. Also applied are reduced rates of insurance contributions 7.6% instead of 30%. The FEZ in Crimea was introduced for the period of 25 years with the possibility of prolongation. As of end of April 2017 the unified register of participants of the SEZ includes 883 organizations. According to Mr. Aksenov, the overall FEZ investment projects amount to 80 billion rubles.

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