Free Port of Vladivostok

The Free Port of Vladivostok was extended to the territory of Chukotka

In accordance with the Federal law of July 13, 2015  No. 212-FL "On the Free Port of Vladivostok", from July 2016, since July 2016, the territory of the Chukotka Autonomous Okrug Pevek urban district is included in the free port of Vladivostok. Its area is 67.1 thousand sq. km., includes the town of Pevek and three ethnic villages. The territory of the Free Port also includes the territory and water area of the sea port of Pevek.

Along with operating in the region "Beringovskiy" Advanced Special Economic Zone, Pevek urban district becomes the second territory with a special regime of entrepreneurial activity. This will attract investment in the development and infrastructure of the two key industrial zones that determine the strategic development of Chukotka: Anadyrskaya and Chaun-Bilibinskaya.

Any business activity is allowed on the territory of the Free Port, except the types of activity defined by a decision of the Supervisory Board of the Free Port of Vladivostok. The Supervisory Board (The Protocol of October 21, 2015 No. 1) established the following types of business activities that the residents of the Free port are not are not entitled to carry out:

1) oil and natural gas production;

2) administrative activities and supplementary services (with the exception of: renting and leasing of agricultural machinery and equipment; construction machinery and equipment for civil engineering, vehicles; air vehicles; water vehicles; railway vehicles; engines, turbines and machine tools; other machinery, equipment and facilities);

3) production of excisable goods, except the production of passenger cars, motorcycles, motor oils, aviation, diesel and motor fuel.

In addition, for certain types of activities, the application of certain measures of state support for entrepreneurial activities may be restricted. The Supervisory Board (The Protocol of October 21, 2015 No. 1) established the types of business activities in which the residents of the Free Port of Vladivostok are not provided with state support measures specified in Articles 19 and 20 of the Federal law of July 13, 2015 No. 212-FL "On the Free Port of Vladivostok":

1) financial and insurance activities;

2) wholesale trade and retail;

To prevent the risk of reduction of Chukotka Autonomous Okrug own revenues from existing developments of gold deposits, the Government of Okrug proposed to define as the activity, which will not be subject to tax benefits for income tax, property tax and land tax, it is the activity "Mining of precious metals ores and sands (gold, silver)" on the territory of Pevek urban district. The proposal was submitted to the Supervisory Board for consideration.

For residents of the Free port tax preferences are established at the federal, regional and local levels.

The Chukotka Autonomous Okrug Regional law of November 7, 2016 No. 101-RL on the establishment of tax preferences for residents of the free port, providing for a reduction in tax rates for:

income tax  (with regard to the incoming profit to the regional budget)

from 18% to 0% in the first five years after receiving the first profit,

from 18% to 10% in the next five years,

organization property tax:

from 2.2% to 0% in the first five years, from 2.2 to 1.1% in the next five years

The Government of Pevek urban district  adopted a decision to reduce land tax rates: from 1.5% to 0% in the first five years.

Preferential rates are applied according to the Tax Code of the Russian Federation since the beginning of the next taxable period — since January 1, 2017.

In addition to tax benefits, Federal law  provides the decrease in the size of obligatory payments to extrabudgetary budget funds, the simplification of administrative procedures, the application of the free customs zone regime for residents of the Free Port.

The anchor platform of the Free Port isthe seaport of Pevek. It is planned to modernize the port, the construction of the quay and the adjacent infrastructure. In connection with the expected growth of turnover during the development of Baimskaya square in 2019-2021, it is planned to expand the port area for the organization of handling operations and processing of goods.

The following projects are among the potential infrastructure investment projects:

— the construction of the highway «Pevek-Rytkuchi» (by the limited liability company under the laws of Russian Federation OOO «Kinross Dal'niy Vostok») with design time of 2016-2017 and construction of 2017-2019;

— the construction of 110 kV overhead line  "Pevek-Bilibino" (PAO RAO ES Vostoka) with design time of 2016 and construction of 2017-2019;

— the construction of deer slaughter house in Komsomolskiy settlement with design time of 2017-2018 (determined by the investor).

In the territory of the Free Port any activity  which is not prohibited may be carried out, including activities of small businesses.

The minimum volume of capital investments is 5 million rubles within a period not exceeding 3 years from the day of obtaining the Free Port resident status.

In the severe conditions of the Arctic circle, the vast square of Pevek urban district has a population of 5,745 people, the population density is less than 0.1 person per sq. km. The lack of overland transport and high level of costs significantly constrain development.

In order to stimulate investment activities in the underdeveloped Arctic region, including small and medium-sized enterprises, the Government of Okrug proposes to reduce the minimum level of capital investments volume for the residents of the Free Port of Pevek to 500,000 rubles (at the level established for the residents of PDA) without any restrictions on the period of development of capital investments.

This approach allow to create the same conditions for investors of the Free Port and the functioning "Beringovskiy" Advanced Special Economic Zone, and to create a balance for the development of two main industrial zones of Chukotka.

The law provides for the organization of border and customs control at Border Inspection Post of the Free Port, there is a customs free zone.

The seaport of Pevek has a seasonal (from July to October) maritime multilateral freight border checkpoint point. But it does not work, because is not equipped, and the checkpoint limits are not set. Typical requirements for its equipment  are not commensurate with the volume of the processed stream and the cost of further maintenance.

Taking into account the climatic conditions, volumes and temporary nature of the work, the Government of Okrug is working with federal agencies on the issue of proportionate reduction of existing requirements for construction and equipping of seasonal or non-permanently operating Border Inspection Post in the Arctic zone. In order to facilitate the development of the Free Port, it is necessary to accelerate the construction and equipping of Pevek Border Inspection Post at the expense of the Federal budget.

Successful scheme of organization of work with residents of PDA "Beringovskiy" will be applied in the territory of the Free Port.

Free consulting and support of residents is provided by NPO Fund for the Development of Economics and Direct Investments of the Chukotka Autonomous Region. The staff of the Fund, who are representatives of the management company AO Korporatsiya razvitiya Dal'nego Vostoka (a joint stock company, corporation of development of the far East), ensure reception and processing of applications in Anadyr:

Cabinet No. 2, Otke street, Anadyr, Chukotka Autonomous Okrug, Russian Federation, 689000

The Fund website: www.fond87.ru

Director of the Fund: Plotnikova Olga Sergeevna, phone: +7 (42722) 6-93-29

e-mail: plotnikovaos@fond87.ru

To ensure real-time interaction with the applicants and residents of the Free Port, it is planned to organize subsidiary representative office: an authorized employee will work with potential and existing residents directly in the town of Pevek.