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June 2019 www.intellinews.com I Page 8
Russia's EconMin launches Virtual Economic Zone idea
Russia's Ministry of Economic Development floated the idea of creating Virtual Economic Zones (VEZ) for IT export-oriented companies, in order to help comply with one of the May decrees of President Vladimir Putin of boosting non-commodity exports from $150bn in 2019 to $250bn by 2024, Vedomosti daily said on May 20 citing drafts of ministry's proposals.
As reported by bne IntelliNews, the VEZ idea was first voiced by the state integrated telecom major Rostelecom and Russian Union of Entrepreneurs and Industrialists (RSPP), who saw it as a way of boosting Russia's share on the global market of data processing centres from 0.9% to 5% by 2024.
In 2018 Russian IT exports stood at $10bn, up by 19% year-on-year, according to the data of Russoft cited by Vedomosti, while only about $5.5bn of that was repatriated.
IT incubators such as Skolkovo hub already provide its residents 10-year exemption from income tax and VAT, discounts on social security payments, and waivers for property taxes and excise duty.
Similar measures are reportedly be proposed for members of VEZs, such as lifting tariffs on imported equipment, discounted profit, property, and land taxes, VAT, accelerated amortisation of assets, unlimited currency operations, and visa- free entry for foreign staff.
The residents of such zones would have to be Russian-based companies with at least 50% of the revenues coming from exports in certain IT-related segments. For example, gaming and other divisions of MTS mobile and Mail.ru internet majors, would comply with such criteria.
Reportedly, the Finance Ministry is opposing some of the support measures suggested, as it would undermine regional revenues, and suggests
to link the VEZ incentives to SARs (Special Administrative Regions) domestic offshore mechanisms instead.
Analysts surveyed by Vedomosti welcome the idea of supporting local IT sector, but note the main impediment to exports competitiveness would remain high costs, as compared, for example,
to neighbouring Belarus.