Russia: Between Protectionism and Structural Transformation
New promoting instrument for investment projects in Russia created
VDMA reported further that the Russian government had created a completely new promoting instrument, the special investment contract, on 16th July 2015 for the investment projects with the focus production. This shall be concluded between the country and the investor. The maximum term is ten years.
The country shall be liable to ensure specific subsidies and to exclude an additional load for the specific investment projects in case of future changes in law, in particular in the area taxes. The investor shall be liable to comply with the business plan submitted at the time of contract conclusion: The amount of investment, number of workplaces to be created, implementation planning, product range for the next year till the end of the contract term, expected tax payments. If the investor does not meet his obligations, since e.g. the production stops after seven years, then the country may reclaim all granted subsidies and tax benefits.
The special investment contract and the requirement for "made in Russia"
The investor must submit certain documents for the conclusion of such contract. These shall be then checked by a committee. The maximum term, within which all procedures should be completed, is 130 working days. A minimum investment amount of 750 million Ruble (approximately 10 million Euro) is required for the conclusion of such contract. The investor obtains subsidies and political support by the special investment contract.
However, he also needs to fulfill extensive and long-term obligations. In addition, VDMA reported that an ordinance came into force on 1st October 2015, with which the government has defined the hurdles for "Made in Russia". For several products, steps in the production are mentioned, which must be executed in Russia. The companies manufacturing in Russia must have the rights regarding the technical and design documentation, which ensure the further development of production for five to ten years.