On 20 March 2023, the government of Russia planning to establish of a free economic zone in the new occupied territories of the Donetsk, Zaporizhzhia Kherson, and Lugansk. Taxpayers that meet the criteria for eligibility and operate within the free economic zone would be entitled to the incentives listed below:
- Corporate income tax at a rate of 0% will be applicable to payments made to the federal budget for a period of 10 years.
- Depending on the nature of the business activity, corporate income tax ranging from 0% to 13.5% will be levied on payments made to the regional budget.
- Exemption from property tax will be granted for a period of 10 years.
- An exemption from customs duty granted to foreign-imported equipment.
- An employee’s social security contribution rate is lowered to 7.6%.
- In the new regions’ free economic zone, a unique business regime will be implemented, which will feature a distinct tax procedure and the option to offer subsidies to cover loan interest rates, up to 100% of the Central Bank refinancing rate.
The proposed incentives for the free economic zone would be valid from 1 January 2024, until 31 December 2050.
