Preservation of tax preferences for SEZ residents was discussed at a meeting of the Committee of the State Council of the Republic of Tatarstan
Deputy Minister of Economy Indira Kireyeva made a report at the visiting meeting of the Committee of the State Council of the Republic of Tatarstan on budget, taxes and finance on the issue “On effectiveness of providing regional tax benefits to residents of special economic zones”.
Special economic zones in Russia are a large-scale project aimed at developing the regional economy by attracting direct Russian and foreign investment in priority activities. In order to develop the manufacturing industry and high-tech sectors of the economy, Tatarstan has created two Special Economic Zones – “Alabuga” and “Innopolis”.
To increase their investment attractiveness for residents, there is a preferential tax regime. Resident companies are exempt from land, property and transport taxes. Tax holidays begin from the moment the tax base appears. The benefit is also provided for income tax, the amount of which varies depending on the period of the investment project. Tax preferences are an incentive and are aimed at increasing the economic activity of SMEs.
The total amount of tax benefits provided to residents for the entire period of operation of the “Alabuga” SEZ, from 2005 to 2019, in terms of consolidated budget of the republic is 10.3 billion rubles, where the prevailing share of benefits - more than 98% (10.1 billion rubles) accounted for by SEZ residents. For residents of the “Innopolis” SEZ, the total amount of tax benefits for the period from 2012 to 2019 is 288.1 million rubles.
Starting from 2020, when determining the effectiveness of tax incentives, a set of criteria is taken into account, one of which is the aggregate budget effect (self-sufficiency). As a characteristic of the budget effect of the complex of tax benefits provided to SEZ residents, the Deputy Minister noted that for each ruble of tax benefits there are 4 rubles of additional tax revenues to the budgets of all levels. Thus, the volume of tax benefits from all budgets is 10.4 billion rubles, while the volume of tax revenues to all levels of the budget amounted to 36.7 billion rubles.
Kireyeva also noted that assessing the effectiveness of tax benefits is impossible without considering the impact of supported investment projects on the socio-economic indicators of the republic's development.
Implementation of industrial-production and technical-innovation projects on the territories of special economic zones by their residents made it possible to ensure an inflow of investments into the economy of the republic in the amount of 151.4 billion. The social effect of implementation of supported investment projects is characterized by creation of about 10,000 jobs in the “Alabuga” SEZ. This indicates a high multiplier budgetary effect due to the development of municipal territories, as well as related sectors of the economy.
“Alabuga” SEZ is the best industrial-production zone in Russia in terms of investment attractiveness. The SEZ, created in 2005, today presents to investors a fully prepared industrial, engineering, transport and customs infrastructure. As of July 1, 2020, 57 companies have been involved in the Alabuga SEZ, where 33 companies are engaged in industrial and production activities. 28 foreign residents of the zone include leading international companies such as 3M, Rockwool, Air Liquide, Armstrong. “Alabuga” SEZ accounts for about 10% of the volume of investments made by enterprises of the manufacturing industry of the republic.
“Innopolis” SEZ is also actively developing. 126 companies have been attracted to the territory of the special economic zone, where 105 companies carry out and plan activities in the status of residents.
“The provision of tax incentives to SEZ residents can shorten the payback period, increase the profitability of investment projects, in addition, the released funds can be reinvested in the replenishment and renewal of fixed assets of organizations, which reduces the cost of their maintenance and operation”, she stressed.
Preservation of tax incentives is a condition for investment attractiveness of the republic's SEZ for investors and their competitiveness among the special economic zones of Russia, where preferential tax conditions for doing business are also in effect.
“Considering the above, we consider it expedient to preserve and further develop the mechanism of preferential taxation for residents of special economic zones of the republic”, Kireyeva summed up her report.