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The Russian government discusses the creation of a tax-free zone in the Kuril Islands

by Artem Rovniy
July 26, 2021
in World
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The Prime Minister of the Russian Federation went on a working trip to the island of Iturup
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The Russian government proposes to create a free customs territory on the Kuriles, to make them attractive to foreign investors by exempting most types of activities from basic taxes, said Russian Prime Minister Mikhail Mishustin.

After visiting a fish processing plant on Iturup Island, Mishustin said that after returning to Moscow he intends to discuss these proposals with the President of the Russian Federation.

“This set of measures is unprecedented. Now I will consult with Vladimir Vladimirovich about what we could do here,” Mishustin said while talking with the fish industry.

In particular, the prime minister said that he was considering “the possibility of introducing a free customs territory regime here, so that manufacturers have the opportunity to import the necessary equipment and goods.”

“In addition, we will think about releasing practically all main types of activities from taxpayer obligations, not including financial intermediation, production of excisable goods and harvesting valuable biological resources,” the head of government said.

In particular, in the Kuril Islands, the head of government explained, it is possible to exempt the taxpayer from the duties of income tax, VAT, property tax, land tax, and vehicles.

“And I think that, of course, we need to maintain a reduced rate of insurance premiums here,” he added.

At the same time, Mishustin stressed that the Kurils “cannot be turned into an offshore”, as it was in the 90s, when “internal offshores were created not to invest in the territory, but to minimize aggressive taxation.”

“And, of course, no one will exempt us from personal income tax,” the prime minister said.

Nevertheless, Mishustin stressed, these proposals “would be a good solution for investors, including Western ones, for the same Japan, which, if interested, can create jobs here.”

“This special regime will make it possible to intensify economic activity here. I will report on these proposals to the President of the Russian Federation and an appropriate decision will be made. I think it will be interesting for everyone who works here, who would like to work here, including our partners from Western countries,” – concluded Mishustin.

He also promised the Far Eastern fishermen to work out a preferential regime for transporting fish to the central part of Russia. During a meeting with the Prime Minister, representatives of the fish processing industry complained to him about problems with the delivery of fish to Russian consumers. In particular, they drew attention to the high transport tariffs for the transport of fish during the season.

As Mishustin noted, “when we were preparing for a visit to the Far East, we thought about it: two resolutions were signed to resolve these issues.

“This is still a solution to the current situation, but this will speed up transport delivery and free up the appropriate refrigeration facilities to use them in the Putin pipeline,” Mishustin said.

In addition, the head of government believes that “it is necessary to analyze the formation of prices for fish products at every stage – from catch to the counter.”

“The President has set such a task, the question is about food prices, and every person has fish on the table. It is necessary to reduce all the associated costs,” the head of government explained.

He promised to work out this issue with the Ministry of Agriculture and Russian Railways.

“But the most important thing is, of course, the tariff, and subsidizing the preferential rates of this tariff for Russian Railways will be an operational decision,” Mishustin concluded.

The Prime Minister of the Russian Federation went on a working trip to the Far Eastern and Siberian Federal Districts, the first point of which was the island of Iturup. There Mishustin got acquainted with the work of the Kuril Central District Hospital and promised to provide it with the necessary modern equipment.

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