Russia unveils plans to create offshore-like zone in the Kuril Islands

Russia is eyeing creating a free tax zone in the Kuril Islands, located in Russia’s Far East region next to the Kamchatka Peninsula, the country’s Deputy Prime Minister Yuri Trutnev said in an interview with RBC newspaper.

“This is practically an offshore [zone]. That is, there will be almost no taxes left in the Kuril Islands,” he revealed, adding that the businesses and people who will carry out investment and commercial activities on the islands won’t have to pay taxes either. The exact figures of the fees that are to remain are still being discussed, Trutnev noted.

He also stated that a proposal has been made not to pass tax inspections in the region for at least ten years.

Last week, Russia’s Prime Minister Mikhail Mishustin instructed relevant authorities to submit proposals on the creation of a special taxation scheme in the Kuril Islands by September 1. The move is set to exempt organizations operating on the islands from paying income, added value and property taxes, as well as land and transport taxes. In addition, it aims to introduce reduced mandatory payments on insurance premiums at a rate of 7.6%.

“A separate instruction concerns additional measures to support entrepreneurs in the Sakhalin Region. We are talking about the introduction of a special tax regime on the territory of the Kuril Islands,” Mishustin stated, as cited by the press service.

According to Mishustin, the plan includes the creation of a free customs zone on the Kurils, a measure necessary to support manufacturers who will import goods and equipment to the islands.

The taxation of individuals in the form of personal income tax will be kept in place, however, as well as the tax for the production of excisable goods, capture fishery of valuable biological resources and financial intermediary activities.

The prime minister said the new measures are crucial for people working in the Kuril Islands, so as not to waste their time filling out paperwork and to have unique economic conditions due to the peculiarities of the climate and work on the islands.

For more stories on economy & finance visit RT's business section