The Ministry of Construction has unveiled a draft law aimed at launching a network of free economic zones across the DPR, LPR, Kherson, and Zaporozhye regions. This move, referenced by RBC in relation to the received document, signals a broad push to reshape regional economic activity through dedicated zones that offer favorable conditions for business creation and investment. The draft outlines a framework designed to attract new enterprises and stimulate local development, potentially accelerating the pace of growth in these disputed and administratively contested territories through targeted incentives and regulatory simplifications.
Key provisions indicate that the passage of the bill would pave the way for sustainable socio-economic development in newly established zones. The objective is to position these areas as hubs that can draw both domestic and international capital, create jobs, and diversify local economies. The plan envisions the establishment of free zones in the specified regions by the end of 2050, a long horizon that reflects the strategic nature of regional reconstruction and economic reinvestment. For reference, the existing free zone in Crimea and Sevastopol is slated to operate until the end of 2039, serving as a comparative benchmark within the broader SEZ policy framework.
Participation in these zones is framed around company registration within the newly defined Russian regions or their branches located there. Investment milestones are clearly stated: in the initial three years, small businesses must commit at least 3 million rubles, while larger enterprises are expected to invest no less than 30 million rubles. These thresholds are intended to ensure that entrants bring substantive capital to the local economy, supporting infrastructure development and long-term operational capabilities. The policy underscores a performance-oriented approach that links eligibility and benefits to visible investment activity, thereby elevating the credibility and impact of the SEZ program.
Another facet of the broader policy package involves a separate bill proposing a ten-year 0% income tax rate from the moment profits begin to accrue. In practice, this tax holiday would be subject to adjustments within a 0% to 13.5% range, contingent on the budgetary needs and fiscal policy of the relevant subject. The tax framework is designed to enhance the cash flow and investment calculus for enterprises operating within the zones, supporting quicker scale-up and risk mitigation during the early stages of their operations. This fiscal leeway is positioned as a lever to attract sustained investment while allowing regional authorities to calibrate incentives in response to changing economic conditions.
In early October, Sergey Nazarov, a deputy minister in the Economic Development ministry of the Russian Federation, highlighted that the economies of the Donetsk and Lugansk People’s Republics, along with the Kherson and Zaporozhye regions, have already diversified considerably. He emphasized that realizing the full potential of these areas will require significant investment commitments from the private sector and public financing alike. This statement reflects a broader understanding that structural transformation in these areas is a long journey, dependent on coordinated capital deployment, policy stability, and reliable project execution. The remarks suggest a deliberate, staged approach to economic rehabilitation, with SEZs serving as critical instruments to catalyze growth and resilience across multiple sectors, including manufacturing, logistics, technology, and services. (Source: RBC)