Proposed Tax Code amendments would introduce a 0% federal CIT rate, property and land tax exemptions, and other incentives for residents of the Unified Territory of Advanced Development (UTAD), while also providing an alternative investment tax deduction for qualifying projects.
Russia’s Ministry for the Development of the Russian Far East and Arctic has prepared amendments to the Tax Code, providing for tax incentives and reduced social security contribution rates for residents of the Unified Territory of Advanced Development (UTAD) covering the Russian Far East and the Arctic Zone of Russia.
Eligible business residents gain access to significant tax incentives, including a 0% federal income tax rate and exemptions from property and land taxes for specific periods. To maintain these benefits, companies must fulfil investment obligations, meet job creation targets, and adhere to strict reporting requirements regarding their capital expenditures.
The corresponding draft law was published for public consultation on 22 September 2026, with comments due by 6 October 2026.
The detailed breakdown of proposed tax & financial preferences is as follows:
Corporate income tax (CIT) incentives
- Zero federal CIT rate: The federal portion of corporate income tax is set at 0% for profits derived from implementing an investment project within the UTAD.
- Regional CIT rate: Constituent entities of the Russian Federation may establish a reduced rate (down to 0%) for the CIT portion credited to regional budgets.
- Duration: The standard 0% CIT rate applies for 5 tax periods starting from the tax period in which the project generates its first profit. For resident entities that have conducted a public security placement or issued bonds, the 0% federal rate applies for 7 tax periods.
- First profit rule: First profit is defined as the positive cumulative difference between project income and expenses calculated from the date of resident registration.
- Core criteria: Residents must be registered within the UTAD, maintain no separate divisions outside the UTAD, refrain from using special tax regimes, and not operate as a non-profit, bank, insurer, pension fund, or securities market participant. At least 90% of total income must derive from the project.
Alternative Federal Investment Tax Deduction (FITD)
UTAD residents implementing investment projects with capital investments of at least RUB 1 billion may choose the Federal Investment Tax Deduction (FITD) instead of the standard 0% CIT regime.
Under the FITD, the federal CIT liability cannot fall below an effective rate of 8% for individual residents, with the deduction capped at 20% of cumulative capital investments over 10 years. Where the deduction is claimed by both a UTAD resident and related entities in the same group, the minimum effective rate is 5%, with a cap of 10% of cumulative investments.
The regime also requires regional authorities to provide a 0% regional CIT rate, a five-year exemption from corporate property tax, and a three- to five-year land tax exemption.
Eligible investments include design, surveying, construction, modernisation, and equipment costs, but exclude land purchases and passenger vehicles.
Property and land tax exemptions
- Resident corporate property tax: A 5-year corporate property tax exemption applies from the month following registration of fixed assets created or acquired for UTAD business operations.
- UTAD management companies: Real estate and fixed assets owned by recognised UTAD management companies for operating the territory receive a 10-year property tax exemption. Gratuitous property transfers from management companies to their subsidiaries are also exempt from VAT.
- Land tax exemptions: UTAD residents receive a 5-year land tax exemption starting from the month ownership is established over plots within the UTAD. UTAD management companies receive a full land tax exemption for plots acquired to perform management functions.
Simplified access to tax monitoring
UTAD residents gain the right to apply for the tax monitoring regime without needing to meet standard statutory minimum thresholds regarding annual revenue, total tax payments, or asset value.
Mineral extraction tax (MET/NDPI) relief
UTAD residents engaged in mineral extraction would be eligible for a reduced territory extraction coefficient (KTD) from the tax period in which they are registered as residents, thereby lowering their overall mineral extraction tax (MET) liability.
Special tax exemption regime for Kuril Islands residents
Kuril Islands organisations granted UTAD resident status would receive exemptions from corporate income, transport, property, and land taxes for up to 20 years, subject to a final deadline of 31 December 2052. A written notification must be filed with the tax authorities within 30 days of registration.
Mandatory separate accounting
Residents must maintain separate accounting records for income and expenses generated by each investment project versus other business activities throughout the agreement term.
Effective dates & grandfathering protection
The amendments to Part One of the Tax Code would take effect on 1 January 2027, while changes to Part Two and Federal Law No. 167-FZ would generally apply one month after official publication. Existing tax preferences and reduced contribution rates under qualifying agreements would remain protected until the agreements expire or resident status is lost.
