Russian President Vladimir Putin has announced tax benefits for businesses operating on the Kuril Islands in the Sea of Japan (the East Sea), with the intention of making the area more attractive to both domestic and foreign investment.
Putin made the announcement last month at the Eastern Economic Forum in Vladivostok, Russia, saying the islands will be given “an unprecedented pack of tax benefits,” Russian media reported.
Investors in the region will be free of value-added tax as well as property tax, income tax, transport tax, and land tax for a decade from the start of any business activity. Some industries, however, will not see benefits – including fishing, mining, oil and gas drilling, and the production of excise goods such as beverages and cigarettes.
The aim, according to Putin, is to stimulate the fish processing, mariculture, and tourism industries in the region, with preferences given to any investor regardless of their nation of origin.
The remote Kuril Islands, comprised of Shikotan, Iturup, Kunashir, and Habomai, are located thousands of kilometers away from other regions in Russia. Part of the Sakhalin region, they have been home to fishery businesses and military facilities. The islands, which had been occupied by Japan until taken by Russia in World War II, are still claimed by Japan. Putin said Japanese companies would qualify for the tax benefits and that they have “great expertise in fishing, processing, and seafood logistics.”
Several Russian fishing companies operate in the area, catching salmon, pollock, cod, ivasi, saury, mackerel, and squid. And salmon hatcheries on the islands released more than 400 million juvenile salmon into the wild last year. In recent years, Russian companies with government backing, including Gidrostroy, have built fish-processing plants on the islands, reflecting the government’s desire to export more value-added seafood from the islands.
Putin's announcement was preceded this summer by a visit to the islands by Russian Prime Minister Mikhail Mishustin. Russia's Minister for Development of the Far East and Arctic Alexey Chekunkov told the TASS news agency that his ministry and the Ministry for Economic Development could potentially expand the recently announced tax benefits and their duration, saying that amendments to legislation for the benefits will be made in 2021.
Photo courtesy of knyazev vasily/Shutterstock
