Tatarstan: Your business partner. Investor's guide. Investor's roadmap (стр. 3 )

Procedure for the connection to gas pipeline network

For being granted a permit to use the natural gas as a fuel, enterprises and organisations should submit the following documents to the Ministry of Industry and Trade of the Republic of Tatarstan:

1) An application for issuing a decision on specifying the kind of fuel, indicating the full name of the organisation, its location, technical and industrial characteristics of its fuel-consuming installations, and the purposes of its use;

2) The statement by an energy-supplying organisation concerning its incapability to supply the applicant with heat energy with account taken for the available capacities of this organisation in respect of heat energy generation, transportation, and distribution;

3) Estimated demand for heat and fuel and other information concerning the fuel-consuming facilities. Estimates should be carried out based on SNiP (Construction Norms & Regulations) proceeding from production capacity, annual output of products and advanced fuel consumption rates, use of the economical process designs yielding the best economic effect;

4) The technical and economic substantiation of the fuel choice and estimates of the fuel quantity;

5) The statement by the OOO Gazprom-Transgas-Kazan concerning the technical capability of supplying the requested volumes of gas through the gas distribution stations and gas pipelines of the enterprise;

6) The Russian certificate for imported gas equipment or the permit of the Russian Federal Service for Ecological, Technical and Atomic Supervision to use it;

7) The opinion by the State Board for Ensuring the Rational Use and Quality of Fuel and Energy Resources in the Republic of Tatarstan concerning the rational and efficient consumption of the fuel in question with the use of the highly efficient fuel-consuming equipment utilising the secondary heat and fuel power resources to the maximum extent possible;

8) The letter of confirmation from ZAO Tatgazinvest concerning its interest in supplying the requested volume of natural gas as demanded by the gas-consuming enterprise, starting with this year;

9) Approval by OAO Gazprom to the use of the natural gas by the consumer.

In accordance with the legislation in force, charges for the connection to gas distribution pipelines are agreed upon by the parties.

The rates in 2011 for the natural gas supplied to consumers in the territory of the Republic of Tatarstan are as follows:

RUR/’000 cubic metres

Since January 2011	Gas consumption in million cubic metres per year	Charge (with VAT)
Over 500	3,577.70
From 100 to 500 inclusive	3,669.71
From 10 to 100 inclusive	3,871.04
From 1 to 10 inclusive	4,212.23
From 0.1 to 1 inclusive	4,216.03
From 0.01 to 0.1 inclusive	4,309.91
From 0.01 inclusive	4,319.35

2.6. Procedure for engaging and using foreign workers

The procedure for staying and working of foreign citizens in the territory of Russia is under supervision by the Federal Migration Service of the Russian Federation. According to the Russian legislation, entry of foreign citizens into the territory of the Russian Federation is carried out on the basis of a visa or in accordance with a procedure not requiring the receipt of a visa; in this case, the period of the stay of a foreign citizen is determined by the period of validity of the visa issued to him, and in the case when its receipt is not required, it cannot exceed ninety days.

The procedure for the migration registration consists of informing (notifying) a territorial body of the Federal Migration Service on the arrival of a foreign citizen to his place of stay and should be carried out within three working days after the entry of the foreign citizen into the Russian Federation. In this regard, one should know that all procedures concerning the migration registration are carried out by the receiving party, and the foreign citizen does not need to apply to any organisation.

The receiving party may be both citizens of the Russian Federation and foreign citizens who are permanently resident in the Russian Federation or stateless persons (who have a residence permit) and legal entities, their branches or representative offices where the foreign citizen actually stays (resides) or works.

An employer has the right to engage and use foreign workers only if it has a permit to engage and use foreign workers. A foreign citizen has the right to be engaged in labour activities in the territory of the Russian Federation only if he has a work permit.

·  Procedure for obtaining a permit to engage and use foreign workers (the document is only required for engaging the citizens arriving from the countries with entry visa regime)

For being granted a permit to engage and use foreign workers, an employer should submit, directly or by registered mail, an application to the migration service authority to be enclosed with the following documents:

a) A statement by the Ministry of Labour, Employment and Social Protection of the Republic of Tatarstan concerning the expediency of engaging and using foreign workers;

b) The draft labour contract or other documents confirming the preliminary arrangements with foreign citizens or foreign partners of the intent and conditions of engaging foreign workers. The conditions of remuneration to and labour safety of foreign citizens, their social security and insurance are determined by the legislation of the Russian Federation with account taken for the peculiar features envisaged by international treaties of the Russian Federation;

c) A document confirming the payment of State duty for issuing employer’s permit to engage and use foreign workers;

1) For a Russian legal entity:

o  a copy of registration in the Unified State Register of Legal Entities;

o  a copy of its certificate of registration with a tax authority at the place of its registration;

2) For a foreign legal entity:

o  a copy of its certificate of registration as a legal entity;

o  a copy of its certificate of registration with a tax authority at the place of its registration in the Russian Federation;

o  a copy of the certificate of opening a branch and a copy of the accreditation certificate for this branch;

o  a copy of the permit to open a representative office and a copy of the accreditation certificate for this office;

·  Procedure for issuing work permits to foreign citizens who arrived in the Russian Federation in accordance with a procedure requiring the receipt of a visa

In order to receive a work permit, an employer should submit an application in the form established by the Federal Migration Service, enclosed with the following:

1. A colour photo of a foreign citizen of 30 x 40 mm;

2. A copy of a document of vocational training or qualification received by the foreign worker in a foreign state;

3. A document confirming the payment of State duty for the issue of the work permit.

When submitting the application, an employer shall present his identity document and an identity document of a foreign worker (its copy), provided that at least six months remain until the expiry of the period of validity of the documents from the date of submitting the application.

Official documents issued in foreign states, whose copies are to be submitted for receiving a work permit, should be legalised in accordance with the established procedure in diplomatic representations or consular institutions of the Russian Federation abroad unless otherwise provided for by international treaties of the Russian Federation.

In case the documents are made in a foreign language, they should be enclosed with notarised translations into the Russian language. When copies of the documents are presented without originals, they should be notarially certified as well.

When receiving the work permit, the employer should present medical certificates confirming the absence in the foreign worker of drug addiction and infectious diseases being of danger to the others, as provided for in the list approved by the Government of the Russian Federation, and the certificate of absence in him of a disease caused by the human immunodeficiency virus.

A decision is made within 30 days. When an expert examination of the documents is required for making a decision, the decision is made within a 15-day period after the receipt of an expert opinion, but no later than 45 days from the date of submitting the documents.

3. Measures of State support

Law of the Republic of Tatarstan No. 1872 of November 25, 1998 "On Investment Activities in the Republic of Tatarstan"

Law of the Republic of Tatarstan No. 2180-XII of July 19, 1994 "On Foreign Investment in the Republic of Tatarstan"

Resolution of the Cabinet of Ministers of the Republic of Tatarstan No. 284 of May 7, 1999 "On Approval of the Regulations on Procedures for Granting State Support for Enterprises and Organisations Implementing Investment Projects in the Republic of Tatarstan"

Attraction of investment is a top priority task of the Government of the Republic of Tatarstan, that is why we offer the most favourable conditions for doing business in our region, such as institutes of development, legislative and tax privileges for investors, administrative and financial support, developed network of industrial parks with infrastructure being prepared for the implementation of projects in any sectors, and training of skilled personnel as required by an investor.

3.1. Rights of investors and their protection

The Law of the Republic of Tatarstan No. 2180-XII of July 19, 1994 "On Foreign Investment in the Republic of Tatarstan" (as amended on January 22, 2008) provides for the following State guarantees of protection of foreign investments:

·  The guarantee of legal protection of foreign investors’ activities;

·  The indemnification and compensation for damages to foreign investors;

·  The guarantee of use and transfer of profits, incomes, and other legally acquired money amounts;

·  The guarantee upon termination of investment activities;

·  Financial support of foreign investors;

·  The guarantee against unfavourable changes in legislation of the Republic of Tatarstan.

Article 14 of the Law establishes the measures of State support for foreign investors in the territory of the Republic of Tatarstan, where a body of executive power of the Republic of Tatarstan performs information support of the foreign investor and grants full support for the investment projects being implemented in priority sectors of economy of the Republic of Tatarstan.

In accordance with Article 8 of this Law, in case any new laws or other regulatory legal acts of the Republic of Tatarstan enter into force which impair the conditions of activities of foreign investors and commercial organisations with foreign investments, then, for the payback period of the investment project, but not more than for seven years, the conditions shall apply to them which were specified in the investment agreement or other agreement (arrangement, contract) and laws in force at the moment when the regulatory legal acts which impair the conditions of activity of investors were adopted.

The Law of the Republic of Tatarstan No. 1872 of November 25, 1998 "On Investment Activity in the Republic of Tatarstan" (as amended on June 24, 2003) established the provision pursuant to which the State guarantees the stability of rights of participants in investment activities. In case any legislative acts are adopted with provisions limiting the rights of participants in investment activities, which were granted to them by agreements concluded prior to adoption of these acts, the conditions of these agreements (contracts) hold true for their entire effective period.

In addition, in accordance with the Resolution of the Cabinet of Ministers of the Republic of Tatarstan No. 123 of March 11, 2001 "On Additional Measures of State Support for Enterprises (Organisations) of the Republic of Tatarstan Implementing Investment Projects", the enterprises (organisations) of the Republic Tatarstan which attract bank credits for the implementation of investment projects in priority areas of the republic's economy are granted State support through granting subsidies as a special-purpose assignment for paying a part of interests envisaged by conditions of the credit agreement.

For the purposes of facilitating the investors' access to information on the financial and economic standing of enterprises, the Resolution of the Cabinet of Ministers of the Republic of Tatarstan No. 780 of October 16, 1997 "On Additional Measures for Increasing the Investment Attractiveness of Leading Enterprises of the Republic of Tatarstan" established the provision pursuant to which the leading enterprises of the Republic of Tatarstan should submit their external financial statements in conformity with requirements of international standards.

3.2. Forms and measures of State support of investment activities

The Law of the Republic of Tatarstan No. 1872 of November 25, 1998 "On Investment Activity in the Republic of Tatarstan" (as amended on July 30, 2009) specifies the following forms of the State support of investment activities:

·  Granting tax privileges;

·  Granting subsidies to the enterprises and organisations to reimburse a part of expenses payable as interests on the credits received in the credit organisations for the implementation of investment projects in priority areas of the economy of the Republic of Tatarstan;

·  Providing prepared sites with infrastructural support for the implementation of projects;

·  Other measures which is not prohibited by legislation in force.

Measures of State support for the organisation of investors’ activities in the Republic of Tatarstan

·  Information support with regard to the structure and capacity of the republic’s and Russia’s markets, concentration of labour, industrial and infrastructural resources required for the implementation of an investment project;

·  Assistance in the implementation of projects with regard to the infrastructural and personnel policies within the territories where an investment project is being implemented (investment sites).

These kinds of State support are granted upon submission of an application by an investor to the relevant sectoral ministry of the Republic of Tatarstan.

Information support for foreign investors is granted by the Ministry of Industry and Trade of the Republic of Tatarstan, an executive authority authorised by the Cabinet of Ministers of the Republic of Tatarstan.

3.3. Tax privileges granted to participants in investment activities of the Republic of Tatarstan

The participants in investment activities who have signed agreements on the implementation of investment projects with the authorised body of the Cabinet of Ministers are exempted from federal taxes in the part payable to the budget of the Republic of Tatarstan, and the republic's taxes in accordance with legislation of the Russian Federation for taxes and levies.

1.  Reduction in the profit tax from 20% to 16%;

2.  Reduction in the property tax from 2.2% to 0.1%;

3.  Reduction in the land tax from 1.5% to 0% (subject to the corresponding decision by the legislative body of a Tatarstan municipality).

The tax privileges are granted to participants in investment activities for the payback period of the investment project, but they may not exceed seven years from the date of commencing the investment. Investment activity entities implementing projects in the field of mechanical engineering may be granted tax privileges for the period of up to thirteen years from the date of commencing the investment.

3.4. Procedure for granting State support for enterprises and organisations of the Republic of Tatarstan implementing investment projects in the Republic of Tatarstan

Resolution of the Cabinet of Ministers of the Republic of Tatarstan No. 284 of May 07, 1999 (as amended on September 26, 2008)

Submitting an application

An application package to be submitted to the sectoral ministry of the Republic of Tatarstan should comprise the following documents:

·  An application of the enterprise for being granted State support, on paper and in electronic format;

·  A business plan of the investment project;

·  Copies of constituent instruments of the legal entity;

·  A copy of its certificate of registration as a legal entity and a copy of its certificate of registration with a tax authority;

Considering the application

·  Upon conducting a State expert examination of the business plan submitted by a participant in investment activities, the sectoral ministry of the Republic of Tatarstan forwards its favourable opinion regarding the business plan of the investment project to the Ministry of Economy of the Republic of Tatarstan;

·  Upon conducting a State expert examination of the business plan, the Ministry of Economy of the Republic of Tatarstan forwards its favourable opinion regarding the business plan of the investment project, estimated shortfall in taxes, an Agreement and the draft Resolution (Order) of the Cabinet of Ministers of the Republic of Tatarstan for approval by the Ministry of Finance of the Republic of Tatarstan.

The time period for consideration by each ministry of this application which was not returned to the applicant for rework, may not exceed 15 days.

Approving the investment project

·  After the investment project documents are approved by the Ministry of Finance of the Republic of Tatarstan, the Ministry of Economy of the Republic of Tatarstan forwards the draft Resolution (Order) concerning signing an Agreement to the Cabinet of Ministers of the Republic of Tatarstan. After the decision is made by the Cabinet of the Republic of Tatarstan, the Agreement on Investment Project Implementation is signed between the enterprise and the Ministry of Economy of the Republic of Tatarstan.

·  The participants in investment activities who have signed the Agreement on Investment Project Implementation with the Ministry of Economy of the Republic of Tatarstan are granted tax privileges in accordance with the legislation on taxes and levies.

·  The Agreement on Investment Project Implementation is signed with the participants in investment activities of all forms of ownership who are implementing investment projects in priority areas of the investment policies of the Republic of Tatarstan, as specified by the Programme of Social and Economic Development of the Republic of Tatarstan and the Investment Memorandum of the Republic of Tatarstan.

4. Special Economic Zone of Industrial Production Type Alabuga in the Territory of the Republic of Tatarstan

4.1. Overview

The Special Economic Zone of Industrial Production Type Alabuga was established on December 21, 2005 in the territory of the Yelabuzhsky District of the Republic of Tatarstan. There are two SEZIPTs of industrial production type in Russia, the SEZIPT Alabuga being the largest with an area of 20 square kilometres.

In the SEZIPT territory, investors are provided with prepared land plots with all necessary infrastructure facilities in place. There is a railway branch extending to over 5 kilometres and a container site intended for 1500 forty-feet containers. The site is crossed by a network of motor roads with a total length of over 20 kilometres. A total of 240 kilometres of electricity grids, gas and heat pipelines and other utilities are brought to each land plot.

One of the best advantages of the SEZIPT is that the residents are guaranteed considerable tax privileges and steady rules of business for the entire period of existence of the Zone, i. e. for 20 years.

The enterprises registered in the SEZIPT territory shall enjoy a number of preferences. In particular, the free customs area treatment, which means that foreign equipment is installed and used within the Special Economic Zone without payment of customs duties and VAT. Besides, they shall not pay export duties for their products. The residents of the Zone shall be exempted from the property and land taxes.

In order to ensure the most favourable treatment and to cut bureaucratic expenses, the SEZIPT Alabuga employs the “single window” approach. The customer service area located in the SEZIPT business centre hosts offices of 16 State regulatory authorities. Residents of the SEZIPT Alabuga enjoy the opportunity of solving all routine problems of interaction with governmental authorities within SEZIPT borders. For the first time in Russia this kind of system is being arranged in the territory of an industrial site.

As of today, residents registered in the SEZIPT Alabuga are implementing large-scale projects in the fields of automotive industry, petrochemical sector, construction industry, and engineering equipment. In addition to the already registered residents, there are a number of companies engaged in the sectors of automotive components, mechanical engineering, woodworking, chemistry, etc. who have plans to place their production facilities in this territory in the near future.

As of January 1, 2011, a total of 15 residents are registered in the SEZIPT Alabuga. The overall amount of declared investments exceeds RUR 30 billion.

Register of SEZIPT Alabuga residents as of April 1, 2011

No.	Company	Projects	Estimated investment (RUR Million)
1.	OOO Sollers-Yelabuga	Launching the Fiat Ducato vans production	4,400.0
2.	ZAO Severstal Auto-Isuzu	Production of trucks	360.1
3.	ZAO Polimatiz	Production of nonwoven Spanbond and Spanmelt materials	1,400.0
4.	OOO Rockwool-Volga	Production of mineral wool	2,800.0
5.	ZAO Technical Equipment Plant	Production of heat pumps and elements of climatic control systems	568.6
6.	OOO Septal	Production of equipment for local and small sewage systems	987.0
7.	OOO P-D Tatneft-Alabuga Steklovolokno	Production of fibreglass	2,800.0
8.	OOO Air Liquide Alabuga	Production of technical gases: liquid oxygen, liquid nitrogen, gaseous oxygen	1,260.0
9.	OOO Akulchev-Alabuga	Launching the confectionery and bakery production	463.0
10.	Kastamonu Entegre	Launching the MDF and particle board production	3,400.0
11.	ZAO Trakaya Glass Rus	Building the plant for production of float glass, automotive glass and mirrors	6,800.0
12.	OOO Belaya Dacha Alabuga	Production of salads and vegetable products	562.4
13.	OOO Saria Bio-Industries Volga	Production of meat and bone meal for animals and technical animal fat	690.0
14.	OOO Sollers-Stamp	Production of stamped components for vehicles	3,200.0
15.	OOO Pixar-Coatings	Production of liquid and powder paintwork materials, corrosion-resistant coatings and wood coatings	574.0

Prospects of SEZIPT Alabuga development