Special Investment Agreement
On July 16, 2015, with the Decree of the Russian Government no. 708, adopted through the Russian Law no. 488-FZ of December 31, 2014 'On industrial policy in the Russian Federation', was announced the final draft of the so called 'Special Investment Agreement' to be used with a range of industrial sectors (including machinery, metallurgy, light industry, chemicals, pharmaceuticals, healthcare and electronics).
The Special Investment Agreement ('SIA') is a special agreement for a maximum of ten years, according to which one or more federal, regional and / or local public authorities undertake to guarantee certain investors a variety of facilities nature in order (i) to create new production facilities; (ii) updating / modernizing existing plants; (iii) the development of production facilities for which no substitutes are available in Russia.
An investor (a Russian legal person) who is required to make an investment of a certain amount for the entire duration of the agreement obtains a tax relief that is easy and invariable over the life of the SIA. In addition, through SIA is also possible to obtain: (i) the formalization of the obtaining of interest-rate subsidized loans, for example, the Development Fund of the specially-established industry; (ii) the formalization of subsidies; (iii) the formalization of obtaining sole supplier status; (iv) the safe determination of the country of origin of the goods.
It should be noted that the final version of the SIA draft does not indicate any type of specific incentives that can be provided to an investor by the authority. On the contrary, they must be negotiated according to each case and by each investor, depending on the terms and conditions of the proposed investment. At present, the fact that a specific SIA does not provide a special tax and customs regime to the investor and therefore makes sense to consider such an agreement only if appropriately combined with other 'facilitation' tools (eg, an agreement regional investment or an agreement on the realization of activities in a Special Economic Zone, where foreign investors can obtain tax and other kind of privileges ).