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The Law on Special Economic Zones - Help or Hindrance to the Tax Planner Julia Mazur

The Law on Special Economic Zones - Help or Hindrance to the Tax Planner Julia Mazur Alinga Consulting Group September 23, 2005. Introduction: Special Economic Zones – Reasons for creation and types; Customs Free Zone; Tax benefits for residents of Special Economic Zone.

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The Law on Special Economic Zones - Help or Hindrance to the Tax Planner Julia Mazur

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  1. The Law on Special Economic Zones - Help or Hindrance to the Tax Planner Julia Mazur Alinga Consulting Group September 23, 2005

  2. Introduction: • Special Economic Zones – Reasons for creation and types; • Customs Free Zone; • Tax benefits for residents of Special Economic Zone.

  3. Special Economic Zones (SEZ) - a region of Russia which has special tax regulations for doing business. • Customs Free Zone (CFZ) – special customs rules for the movement of goods within a SEZ: • foreign made goods – no custom duties and VAT; • Russian made goods – export custom regulations apply, without export duties.

  4. The main goal of Special Economic Zones is the development of: manufacturing sector; high tech sector; new kinds of products; transport infrastructure. • Types of SEZ: • industrial production; • innovative technology.

  5. Goods sold under special customs rules of CFZ is charged VAT of 0% - on the condition the documents according to the p.165 of the Tax Code are submitted to the Tax Office. ATTENTION! Exporters moving their goods to a foreign territory and sellers moving their goods to the CFZ are supposed to submit the same set documents to the Tax Authority.

  6. Residents of all types of SEZ have tax benefits as follows: profit tax: R&D expenses are fully deductible and in the same period the research was conducted; property tax: property recorded on balance sheet of a SEZ resident is not subject to taxation for 5 years; land tax: a SEZ resident is free of land tax for 5 years.

  7. Residents of the industrial SEZ get profit tax benefits as follows: the right to apply an additional coefficient to the standard amortization of the owned assets but no higher than 2; exempt from 30 % limit of loss carried forward.

  8. Residents of the innovative technology SEZ get unified social tax benefits: maximal unified social tax rate is 14% (regressive scale still applies). The tax exists only in the part paid to the Federal Budget.

  9. Thank you for your attention! The Team from Alinga Consulting Group www.acg.ru Phone: (095) 783-7618, (095) 506-5086

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