President enacts legislation to aid Tor residents with insurance subsidies
In a recent development, a new law has been published in Russia, aiming to improve the mechanism for applying reduced insurance premiums for residents of the Advanced Development Territories (ATOs) and Vladivostok Free Port (VFP), who received their status before January 1, 2023.
This law amends Article 427 of Part Two of the Russian Tax Code, providing a temporary suspension option for reduced insurance premiums. The benefit is most advantageous during the phase of introducing a new project into operation, when a significant number of jobs have already been created.
Businesses implementing projects in ATOs and VFPs need to ensure compliance with sanctions to avoid legal and financial risks. This includes adhering to restrictions on certain services and goods, as well as navigating the practical difficulties that sanctions can cause in making payments related to Russian trade, including potential issues with reinsurance contributions and shortfalls.
The total investment by ATO and VFP residents amounts to over 7.8 trillion rubles, creating 272,200 jobs across the regions. In Yakutia, there are two ATOs, "Yakutia" and "Southern Yakutia," with a total of 67 residents. The investments by ATO residents in Yakutia have created 10,126 jobs in the region.
The law allows residents to temporarily suspend the application of reduced insurance premiums from 30% to 7.6% for up to 3 years. This measure is particularly important for projects that were unable to launch production on time due to the COVID-19 pandemic or Western sanctions and had not yet hired their main staff.
For ATOR and VFP residents, the benefit of reduced insurance premiums is valid for 10 years. Businesses can temporarily suspend the use of the preference for up to 3 years until the active hiring phase begins. It's important to note that the provision of insurance and reinsurance services is prohibited where it relates to aviation and space goods and technology, or if it is for use in Russia or by persons connected with Russia.
This new law is part of a presidential directive aimed at improving the economic conditions for residents of the ATOs and VFPs. Despite the challenges posed by sanctions, the investments made by ATO and VFP residents continue to significantly contribute to the Russian economy, with businesses investing 3.7 trillion rubles in the country's economy and launching 810 projects.
Finance and business sectors will need to carefully navigate sanctions in order to avoid legal and financial risks when implementing projects in the Advanced Development Territories (ATOs) and Vladivostok Free Port (VFP). This includes ensuring compliance with restrictions on certain services and goods, as well as managing the practical difficulties that sanctions can cause in making payments related to Russian trade, including potential issues with reinsurance contributions and shortfalls.
The temporary suspension option for reduced insurance premiums, as provided by the recent law amending Article 427 of the Russian Tax Code, is particularly important for projects in ATOs and VFPs that faced delays due to the COVID-19 pandemic or Western sanctions and have not yet hired their main staff.
