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State Secretary - Deputy Minister of the Ministry of the Interior Pavel Volkov told EastRussia how laws are adopted and work for the Far East - EastRussia | Interview






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Legislation of priority development

State Secretary - Deputy Minister of the Ministry of the Interior Pavel Volkov told EastRussia how the laws for the Far East are being adopted and working

In December of this year, the federal law on territories for advanced development will mark the third anniversary, the first in a series of specialized normative acts that created a special legal regime for investors in the Far East. Now such laws are already 25. About what has been done and what is planned - in an interview with EastRussia Pavel Volkov tells, the State Secretary - the Deputy Minister of the Russian Federation for the Development of the Far East.

Legislation of priority development
Photo: Ministry of Economic Development of the Russian Federation
Special project TORA and Free Port
- Pavel Mikhailovich, the key feature of the investment climate that is being formed in the Far East today is that it is based on a whole range of special laws that somehow determine specific regulation for the region. How much can you consider this work to be completed, or does the creative process continue?

- Quite rightly, one of the basic basic principles of advancing development of the Far East is the creation and improvement of the legislation of advanced development in various branches of law, which should ensure competitive and better living conditions and business in the macroregion. The Ministry pays much attention to this task, but we do not only create the legislation of advanced development in the Far East. Specially created development institutions, public council of the ministry, experts and, of course, investors of the Far East are involved in this work. Separately, I would like to note the great support of the deputies and senators, who not only actively work on government bills in the State Duma or the Federation Council, but also themselves become the authors of legislative initiatives.

To date, we have established a database of 25 legislative acts and more than 70 acts of the government, the whole complex is purposefully working for the development of the Far East and ensuring the advanced development of the macroregion - this is what we call advance development legislation. And these are not only the laws on the territories of advanced development, the Free Port of Vladivostok, the Far Eastern hectare. This and other regulations aimed at supporting individual industries, to lift certain restrictions.

The process certainly continues. New laws are being adopted, and already adopted laws are being adjusted on the basis of law enforcement experience.

- Summing up the results of the 2017 year in terms of lawmaking, what has been done?

- 2017-th year has become quite successful in the legislative plan. The legislation of advanced development has been supplemented by seven federal laws in completely different branches of legislation and regulating different spheres of life in the Far East.

Thus, in March, a law came into force providing entry into the territory of the Free Port of Vladivostok to Vladivostok with electronic visas. This mechanism has already shown its relevance in the Primorsky Territory, then we plan to expand the geography of the electronic visa application.

In April, a law came into force that eliminated excessive taxes from the management company TOR and the Free Port of Vladivostok - this would allow the Far East Development Corporation to allocate more funds directly to the construction of infrastructure.

In June, a small but very important law came into force, which amended and supplemented the previously adopted law on the reduction of energy tariffs in the Far East. In fact, it has now become possible to equalize energy tariffs for industrial consumers in the Far East to the average Russian level. Let me remind you that the tariff in certain areas of the DFO reached 14 rubles per 1 kWh. Now businesses have the opportunity to pay 4 rubles - as the national average.

In July, the law entered into force, which expanded the boundaries of the Free Port of Vladivostok to the Uglegorsk City District of the Sakhalin Region. In this area, there is a great potential for modernization of port facilities and projects in the field of mining, processing and transshipment of coal. Also in July, a law came into force that will allow to apply reduced income tax rates for enterprises of the tourist industry of the Far East from 2018 to 2023 year.

Also in July, significant useful adjustments were made to the law on the "Far Eastern hectare" and a separate law aimed at clarifying the powers of regional and local authorities in the field of urban development.These amendments were initiated and supported by the regions whose territories were included in the Freeport of Vladivostok .

- How productive is the autumn session of the parliament for the Far East?

- Productive. Literally the other day - November 22 - the Federation Council approved two very important laws: the first was developed and adopted to extend tax periods before the application of preferential income tax rates for organizations on large investment projects. The second law is the extension of the mineral extraction rate for projects in the Far East related to the extraction of certain types of ores - tin.

Another bill is now passed by the State Duma in the first reading and is connected with the possibility to implement projects in the TOP in the consolidated group of taxpayers.


- As you noted, in March, a law came into effect, ensuring entry into the territory of the Freeport via an electronic visa. In August, the first visas were issued, the people went. How do you assess the operation of this law?

- E-visa showed its relevance. From August to the end of November, we have issued more than 5 thousands of e-visas, while 3,2 thousands of people have already taken advantage of them and arrived in Vladivostok. What is interesting - applications were received from all without exception 18 countries whose citizens have received this opportunity.

- In this list - half of the Arab countries. Everywhere people go?

"Suffice it to say that our first citizen was a Saudi citizen." And only the second - a citizen of China.

- Which countries are the most active citizens of the electronic visa?

- The leaders are clear - this is China and Japan. From China to Vladivostok by e-visa to date, moved more than 1,8 thousand people, from Japan - over 1,2 thousand people.

- And for what purpose do people go for 8 days to the Free Port?

- When applying, the foreigner must indicate the requested type of visa. The absolute majority declares the tourist purpose of the trip.

- Correctly I understand that people traveling on an electronic visa can fly to Vladivostok only on an international flight, that is, from the same Arab countries they need to travel not via Moscow, but by docking via Beijing, Seoul, Tokyo?

- You can, of course, enter through the maritime checkpoint in Vladivostok, but by air you can only enter through the airport "Knevichi" in Vladivostok. So far, only this airport has the appropriate equipment and software. That is, the border on an electronic visa can only be crossed here. Transit through Moscow with such a visa can not be flown. Accordingly, foreign citizens must choose routes through Asian hubs that have air links with Vladivostok.

- The President at the Eastern Economic Forum called for the expansion of the use of electronic visas in the Far Eastern subjects. How will it look like?

- Under the existing legislation, new checkpoints will open in the Far East at the beginning of the year, through which electronic entry will be possible. These are railway and automobile checkpoints on the border of the Primorsky Territory and China (Pogranichny, Khasan, Makhalino, Poltavka, Turiy Rig), two ports in Primorye (Posiet and Zarubino) and two ports in other regions - Korsakov on Sakhalin and Petropavlovsk in Kamchatka.

At the same time, the current legislation does not allow us to use the electronic visa regime at the airports of Petropavlovsk-Kamchatsky, Yuzhno-Sakhalinsk, Khabarovsk and other cities. This is due to the fact that, although some municipalities of these subjects of the Federation have entered the Free Port of Vladivostok, the airports themselves (and checkpoints in them) do not belong to the territory of the Free Port. Therefore, as part of the execution of the President's instruction, in the near future we are submitting to the Government a bill that contains amendments to the federal law "On the procedure for leaving the Russian Federation and entry to the Russian Federation." With the help of these amendments, we intend to open the possibility for foreigners to visit Far Eastern subjects on the conditions of an electronic visa. We expect that this will be a big step forward for increasing the popularity of electronic visas and, correspondingly, an increase in the number of trips to the Far East.

- That is, in Kamchatka, from the next year an electronic seaport will work on an electronic visa, not an airport?

- Absolutely. The seaport of Petropavlovsk-Kamchatsky - already from 1 January 2018. The airport - after the adoption of appropriate amendments to the legislation, and the subsequent measures to equip the checkpoint with the necessary equipment and software.

- And what about EAO? There is no international airport in Birobidzhan.

- The EAO does not operate the Vladivostok Free Port regime and there is no international airport (Khabarovsk airport is used). Unfortunately, under these conditions, it is not possible to apply an electronic visa to enter the EAO in the near future. The law does not allow a foreign citizen to leave the subject of the federation into whose territory he has entered. Therefore, it will not be possible to receive an electronic visa to the Khabarovsk Territory and enter the EAO. So the question is the subject of further regulation.


- You touched on the topic of adjusting taxes for large investment projects. The same was done in the interests of large projects, such as Amursky GPP, VNKhK? What is the essence of the adjustment? How easy were these amendments?

- The law establishes additional tax periods. Now the standard conditions for investment projects are that the 10-year preferential tax rate comes into force at the latest - through the 3 tax period after the investor became a resident of the TOP. However, a large enterprise in the 3 year may not have time to build up and make a profit, accordingly, part of the benefits with regard to them "burns out." Proceeding from this, the new law decides: if the investor invests over 500 million rubles, then the rate enters the 6 tax period. If over 1 billion rubles - then the 7-th tax period. And if the project costs over 100 billion rubles - then the 10-th tax period. So it is beneficial not only to the investors you mentioned, but also to many others who implement large projects.

Let me remind you that this was the instruction of the President; it was given as a result of last year’s Eastern Economic Forum. The question is quite long, but, as I said, we are close to the result - the law has already been approved by the Federation Council. We hope that this year it will come into force.

- Is it a separate bill? Not an amendment to the law on TOP?

- All that concerns the tax law is the Tax Code, and the law amends it accordingly. By the way, we drafted the bill together with the Ministry of Finance, but it was represented in the State Duma by the Ministry of Finance - like all other acts related to budget and tax legislation.

- What other legislative initiatives were, in fact, "targeted" adjustment of the regulatory framework in the interests of investors in the Far East?

- The Freeport of Vladivostok expanded to the Uglegorsk District of the Sakhalin Region. This allowed us to cover a bush of investment projects with preferential treatment. Currently, we are preparing an extension of the regime to the Sovgavansky district of the Khabarovsk Territory, further amendments are being considered - Komsomolsk-on-Amur.

In the spring there will be a bill that will amend the legislation on the TOR. This is a large enough normative act, it is aimed at taking into account the entire experience of law enforcement practice, leveling all the revealed difficulties in the application of the current law. In addition, there will be a number of novels, for example, we are laying the standard for the creation of aquatic TOPs.

- What is a water TOP? Is it a clean water area?

- Yes. We intend to create a legal opportunity to determine the area of ​​a surface water body and form an TOP there. This will provide an opportunity to practice aquaculture. Corresponding corrective amendments are being made to the law on aquaculture, which will allow the Far East Development Corporation to do most of the work related to the formation of a fish farm instead of a resident.

- One of the initiatives that is currently being worked out is the so-called “grandfather clause”. What will she give to investors?

"The grandfather's reservation" means the invariance of legal conditions in a certain period of time.This bill is now in the government, we expect that it will go to the State Duma this year already.It contains changes in tax legislation that will guarantee the invariability of tax norms in regarding the residents of TORs and the Free Port of Vladivostok for 10 years.


- Tell me, how do you monitor law enforcement practice? The way new laws work, what measures are effective, what, on the contrary, are the censure?

- Monitoring law enforcement practices is a very important aspect. We keep it constantly, some time ago we even set up a special unit - the Center for Monitoring and Law Enforcement Practice of the Legislation of the Territories for Leading Social and Economic Development and the Free Port of Vladivostok was singled out.

Another commission was created, four working groups, each in its own direction. One - for customs issues TOP and SPV, the second - on land, the third - on tax and the fourth - on general issues. The format of the working groups allows active involvement in the discussion of the business (current and potential residents of TOP and SPV), so we receive feedback directly from those to whom the laws are intended.

- And what is this feedback?

- As a result of the work of the commission and its working groups, we, for example, identified the need for residents to have separate units outside the TOP and SPV, as well as interest in reducing administrative requirements when residents apply the customs regime of the free customs zone and in simplifying the procedure for granting land for their implementation activities. These are very important aspects, we will, of course, take them into account when making adjustments to the laws.

- Is there any practice of legal advice to foreign investors? Now there are a lot of contracts with foreigners, are they asking questions?

- Foreign investors, as a rule, have their own representative offices or hire specialists, consultants to project their investment project to the legal regime of a TOR or SPV. Appeals come, of course, are mainly interested in clarification of the legislation, clarification. Of course, we consider it our duty to most openly and professionally disclose certain issues and features of legal regulation. To do this, we created the Agency for the Far East to attract investment and export support and the Corporation for the Development of the Far East - these institutions were created in order to provide high-quality services to investors (add a little about funkional).

- And according to what standards are investors seeking advice in the first place?

- The most frequent, perhaps, concerned taxes and how to become a resident. Many questions, by the way, we took off when we began to publish a detailed infographic, which told in simple words how to become a resident, what the essence of tax benefits is and what are the bases for their provision.

What I have enumerated is just the first cut of questions. Further, as a rule, the questions become more complicated and related to the details of a particular investment project (which TOP or SPV mode to choose where to find the land for the project, where to find employees for production, etc.). Investors look at the project taking into account its financial model, compare several points, one at the Free Port, the other at the TOR. The site in the Freeport, for example, is better, and in the TOP there are additional bonuses - for example, the infrastructure can be financed from the federal budget. For a competent choice, we need a thorough analysis of the entire economy of the project - this is where the careful study of legislation, our assistance and qualified assistance to the development institutions of the Far East is required.

- Do you monitor judicial practice?

- We conduct monitoring of law enforcement practice of the legislation of advanced development of the Far East, which includes monitoring of judicial practice. But so far, fortunately, I have not heard about any disputes related to the application of our legislation. At the same time, we have cases when the "Corporation for the Development of the Far East" participates in the courts, protecting the interests of investors.

- The issues that were raised in litigation were related to land, in particular, the provision of land to residents of the Free Port.

- We have norms that allow the Free Port to provide land to residents without bidding. No need to pass a tender or auction, a tender for the land, if it is as such. But, as a rule, those sites that residents want - they have different kinds of participants in economic relations. Therefore, many decisions stall, hang in a bunch of bureaucratic procedures. To help investors solve these problems, we have drafted a bill that will fully take the procedure related to the provision of a land plot to the Development Corporation of the Far East and save residents from excessive bureaucracy or, worse, communication with unscrupulous officials.

- That is, when there will be an interest of the investor to a certain site in the Freeport of Vladivostok, this section is first taken by the corporation, and then passes to him?

- Yes.

- And if there is a situation when two participants want the same site?

- The principle whose application is received earlier will be valid.

- You talked about clarifying the powers of regional and local authorities in the field of urban development - a special law was adopted on this matter. And what was wrong, why it was necessary to adjust the distribution of powers?

- The history has arisen since the adoption of the law on the Freeport of Vladivostok, the reason for it is that in the Primorsky Territory literally a month before the final approval of this Law, the powers in the field of urban development were redistributed. Namely - regional regional law they were transferred from the local authorities of the Vladivostok agglomeration to the level of the regional administration. And in Primorsky Krai, a conflict arose due to the fact that the Law on the Freeport envisages the presence of town-planning authorities in the local government, and the regional authority passed in accordance with the general provisions of federal legislation, powers in this sphere were transferred to the regional authorities. Already then the work began, connected with the fact that this collision should be eliminated. Now this work is completed.


- What are your plans for the 2018 year?

- We are preparing a number of bills, some of them we expect to bring to the State Duma in the spring. I have already spoken about a bill that will make many useful adjustments to the law on TOP. There are a number of initiatives related to the legislation on TOPs, which we intend to propose. Firstly, this is an extension of the term of application of preferential tariffs of insurance premiums to 2025 for residents of TOP and SPV. Secondly, it is the legislative establishment of a special regime for exercising control (supervisory) activities in the TOP in the Far East. And thirdly, it is the removal of restrictions for residents of the TOP by the availability of branches, isolated units, jobs outside the border of the TOP.

Another initiative related to TOR, but located in a slightly different direction, is the adjustment of the procurement legislation of state-owned companies. We propose to allow state-owned companies to conclude long-term contracts for the procurement of goods, works, services from residents of TOP. This will allow companies to receive guaranteed sales, which, in turn, will be an indisputable advantage when making an investment decision, or when applying to a financial organization for debt financing.

- And besides the TOP?

- Very important story - to achieve exemption from VAT services for air transportation of passengers and baggage from / to the Far Eastern Federal District. This measure is directly aimed at increasing the transport accessibility of the region.

Another layer of work - further adjustment of the legislation on the "Far Eastern hectare." In particular, while fulfilling the president's instruction, we must ensure the distribution of the program to participants in the resettlement program for compatriots and their families, provided they obtain Russian citizenship.