Benefits of business development in the Russian Arctic zone

The Arctic is a unique region that has increasingly attracted the attention of the states of the northern Pacific Ocean in recent years. Its growing economic, transport, logistics and economic potential forms a solid basis for international cooperation; scientists and experts from all over the world analyze the rich natural potential of the seas and subsoil and the possibilities of using the Northern Sea Route.

The modern vision of the Arctic through the prism of practical interest is reflected in a carefully designed development strategy and can be traced in every event aimed at developing and managing the region. To solve key socio-economic problems and increase the level of development efficiency, a new business support regime was created - the Arctic Zone of the Russian Federation, designed to support investors throughout the territory of the Arctic Zone of the Russian Federation and create the most comfortable conditions for doing business for them.

Administrative division

According to the Decree of the President of the Russian Federation of May 2, 2014 No. 296 "On the land territories of the Arctic Zone of the Russian Federation", with amendments and additions, administrative entities of 9 regions are included in the Arctic zone. In accordance with the Federal Law of July 13, 2020 No. 193-FZ "On state support for entrepreneurship in the Arctic Zone of the Russian Federation" The free economic zone of the Arctic Zone of the Russian Federation extends to the following territories:

• Arkhangelsk region: the cities of Arkhangelsk, Novodvinsk, Severodvinsk; Mezensky, Primorsky, Onega, Leshukonsky, Pinezhsky districts, urban district "Novaya Zemlya"
• Krasnoyarsk Territory: Norilsk, Taimyr Dolgano-Nenets and Turukhansky districts, rural settlements of the Evenki municipal district: “Village of Surinda”, “Village of Tura”, “Village of Nidym”, “Village of Uchami”, “Village of Tutonchany”, “Village of Essey”, “Village of Chirinda”, “Village of Ekonda”, “Village of Kislokan”, “Village Yukta
• Murmansk region
• Nenets Autonomous Okrug
• Republic of Karelia: Belomorsky, Kalevalsky, Kemsky, Kostomuksha, Loukhsky, Segezha districts
• Komi Republic: urban districts of Vorkuta, Inta, Usinsk; Ust-Tsilemsky district
• Republic of Sakha (Yakutia): Abyisky, Allaikhovsky, Anabarsky, Bulunsky, Verkhnekolymsky, Verkhoyansky, Zhigansky, Momsky, Nizhnekolymsky, Oleneksky, Srednekolymsky, Ust-Yansky, Eveno-Bytantaysky districts
• Khanty-Mansiysk Autonomous Okrug — Yugra: Beloyarsky municipal district, Berezovsky municipal district
• Chukotka Autonomous Okrug
• Yamalo-Nenets Autonomous Okrug

An extremely advantageous geographical position and changing climatic conditions ensure a continuous increase in the economic potential of the entire region and the Northern Sea Route in particular. The shortest sea route between the Pacific and Atlantic oceans is a transport corridor for the transportation of minerals, oil products, food and vital goods for the peoples of the Far North.

Among the benefits, the following can be highlighted:

• reduction in transportation times
• reduction in travel costs
• fuel savings
• no queues
• safety

According to the Arctic development strategy, the volume of cargo traffic will increase many times over due to the development of oil and gas production projects. At the same time, work is underway to improve the infrastructure support of seaports, logistics complexes and transshipment points.

The “Arctic Zone of the Russian Federation” is a new type of state support that extends to the entire territory of the Arctic zone. Companies that have submitted projects with an investment volume of over 1 million rubles can obtain the status of a resident of the Arctic Zone of the Russian Federation and take advantage of benefits and preferences.

Tax benefits

Regional and municipal tax benefits are established separately for each region.

• Profit tax - 0% for 10 years (federal part) from the date of receipt of the first profit. Does not apply to projects in the field of mineral extraction, LNG production and petrochemical products. The benefit for the regional part of the tax is established by the subject of the Russian Federation.
• Land tax - 0% for the first 3-5 years.
• Property tax of organizations - 0-1.1% for the first 5 years.
• Unified social tax - 75% of the volume of insurance contributions is subsidized. Only for new jobs. Does not apply to hydrocarbon extraction projects.
• MET - 0.5 of the current rate for solid minerals. Only for new deposits. The amount of the benefit cannot exceed the volume of private investment in infrastructure, enrichment or processing. Valid until December 31, 2032.

Administrative preferences

All residents of the Arctic Zone of the Russian Federation receive preferences for the implementation of their projects:

• Possibility of using the free customs zone (FCZ) procedure on the developed and equipped areas of residents. Foreign goods are imported and used without paying customs duties and VAT. Russian goods are placed and used with the payment of excise tax and without payment of export customs duties.
• Provision of land plots in state or municipal ownership to residents without bidding.
• Simultaneous implementation of environmental impact assessment and state expertise of design and estimate documentation.
• Protection of residents' interests in court (the Management Company has the right to represent and protect in court the interests of the residents of the Arctic Zone of the Russian Federation who have applied to it).
• Special regulations for the operation of checkpoints on the state border of the Russian Federation in the Russian Arctic.
• Assistance in finding financing.
• Marketing support and cooperation of residents.
• Investor's account is an information system for the work and interaction of initiators of investment projects with the Ministry for the Development of the Russian Far East and institutions for the development of the Arctic zone of the Russian Federation. The system is designed for convenient storage of project documents, prompt receipt of responses and timely identification of existing problems.
• Infrastructure subsidy: provision of a subsidy from the federal budget for capital investments in infrastructure facilities. Recipients: initiators of new investment projects in the territory of the Arctic zone of the Russian Federation with an investment volume of more than 300 million rubles.
• HR support

How to become a resident of the Arctic Zone of the Russian Federation

1. Requirements for a person applying for Resident status:

• Resident status can be obtained by commercial organizations and individual entrepreneurs registered in the Arctic zone of the Russian Federation.
• The minimum amount of capital investment in an investment project must be at least 1,000,000 rubles (excluding VAT).
• The investment project or area of activity must be new for the Applicant at the time of filing the Application.
• A new project is one in which, at the time of filing the application, the amount of capital investment made is less than 25% of the total amount of capital investment provided for in the business plan (excluding the costs of acquiring licenses for subsoil use (if any).
• The Applicant must not be in the process of reorganization, liquidation, bankruptcy.
• The Applicant must not have any tax arrears and fees, insurance premiums to state extra-budgetary funds of the Russian Federation, as well as debts on other mandatory payments to the budgets of the budget system of the Russian Federation for the past calendar year, the amount of which exceeds twenty-five percent of the book value of the Applicant's assets.

2. Required set of documents:

• Application.
• Copies of constituent documents (for legal entities).
• Business plan.
• Investment project implementation schedule.
• Certificate of registration with the tax authority.
• Certificate of the tax authority on the absence of debts.
• Accounting statements of the applicant for the previous 3 years or for the period of activity if the activity is carried out for less than 3 years.
• Planned staffing table.
• Amount of tax revenues from the implementation of the investment project.
• Consent to the processing of personal data.

3. Submission of documents in electronic form through the Personal Account.

4. Conclusion of the Agreement and inclusion in the Register of Residents of the Arctic Zone of the Russian Federation.

• The procedure for registering residents of the Arctic zone is strictly regulated and simplified as much as possible for the convenience of a potential investor: it takes up to 37 days.
• The application review period is 10 working days from the date of application.
• The management company notifies the applicant of the results of the application review.
• The management company sends the applicant a draft agreement on investment activities.
• The applicant signs the agreement and returns the document to the management company.
• The management company signs the agreement on its part.

Regulatory legal acts of the Russian Federation

• "On state support for entrepreneurial activity in the Arctic zone of the Russian Federation" Federal Law of 13.07.2020 N 193-FZ.
• Federal Law of 23.03.2024 N 56-FZ On Amendments to Art. 7.1 of Federal Law of 31.05.1999 N 104-FZ and Art. 2 of Federal Law of 13.07.2020 N 193-FZ.