17.09.2010 12:08
Review of legislation governing activities of Skolkovo Innovation Center
On September 10, 2010 the State Duma of the Russian
Federation (the “State Duma”) adopted a set of draft laws in their second reading,
which were introduced by the President of the Russian Federation and targeted
at ensuring conditions for the development and operation of the Skolkovo
Innovation Center (the “Laws” and “Skolkovo Center,” respectively, published on
the State Duma’s official web site on September 17, 2010):
Draft Laws are expected to be reviewed in the third reading by
the State Duma on September 21, 2010. This provided, no amendments can be
introduced in the draft laws in their third reading and the draft laws in whole
or their separate chapters, sections, articles are not subject to discussion.
In the event the draft Laws are approved by the State Duma and the Federation Council
of the Russian Federation and are signed by the President of the Russian
Federation, all provisions set forth in this review will cover the enacted
Laws.
Project Participants
Tax and other incentives to be introduced by the Laws will be
offered only to the project participants. Only Russian legal entities (the “project
participants”) which may be deemed to be such project participants are those
that carry out research and development and are engaged in commercialization of
their results in the following fields: (1) energy efficiency and saving; (2)
nuclear energy technologies; (3) space technologies; (4) medical technologies;
(5) strategic computer technologies and software.
It is also very important to highlight that until January
01, 2014 the permanent executive body of a project participant may be located
outside the Skolkovo Center area. This means that until January 01, 2014
project participants may in fact be located at any place in the Russian
Federation.
A project participant loses its status upon expiry of 10
years starting from its inclusion in the participant register or earlier on
grounds set forth by the Law. Such regulation may adversely affect bringing
innovation companies to the Skolkovo Center since tax incentives are valid for
them only within the first 10 years, but the companies may in fact use them
only when commercialization of developments begins which may take 5 or more
years starting from the time the company is included into the list of
participants.
Tax and Other Incentives
The Law on Amendments introduces amendments to the Tax Code
of the Russian Federation, granting unique tax incentives to the project
participants.
The project participants are entitled to VAT exemption (with
the exception of importation of goods to Russian Federation) within 10 years
starting from being awarded the status of project participant. Such right is
terminated when the aggregate profit of the project participant exceeds 300 million
Rubles from the beginning of the year following the year where the income constituted
1 billion Rubles.
Another material tax incentive is a 10-year exemption from
corporate profit tax granted to the project participants. This incentive
terminates when the annual amount of income derived from selling
goods/works/services exceeds 1 billion Rules within a tax period.
In addition, the project participants will, for a period of 10
years, make insurance contributions under compulsory pension insurance in the
amount of 14%, provided that starting from 2011 such tariffs will comprise 26%
for all companies in Russia. Meanwhile, the project participants’ contributions
to the social insurance fund and compulsory medical insurance fund are not
envisaged for this time period, i.e. for 10 years starting from when the status
of project participant is awarded. Regional bodies of the Social Insurance Fund
of the Russian Federation allocate money for paying insurance coverage to employees
of the project participants (save for payments on grounds of temporary
incapacity).
The project participants with annual profit not exceeding 1 billion
Rules will be released from the obligation to maintain accounting records.
Special Customs Regulations
The Management Company is entitled to render to the project
participants customs broker/representative services with respect to goods
imported for use at the Skolkovo Center, save for excisable goods. Customs
payments will be made by the Management Company upon instructions of the
project participants.
It is planned that the costs for making customs payments
will be compensated in form of subsidies by transferring money to the
Management Company.
The above mentioned incentives are established in the draft
Law but at present it is unclear how they will apply within the context of the
Customs Union under the Eurasian Economic Community. Pursuant to the terms and
conditions of the trilateral agreement between members of the Eurasian Economic
Community, customs duties paid on the territory of one member state of the Eurasian
Economic Community are to be distributed between all its members. In this
connection it is unclear how this issue will be settled with other members of
the Eurasian Economic Community.
Management Company
The laws provide the Management Company, which is to be appointed
by the President, the major role in implementing the Skolkovo project.
Presumably, once the Laws come into force the status of the
Management Company will be granted to the Development Fund of the Center for Development
and Commercialization of New Technologies, a non‑commercial organization (hereinafter
the “Fund”), which was registered on May 12, 2010, The Fund was established
with Russian Academy of Science, state corporation Vnesheconombank, Rosnano,
Moscow State Technical University named after N.E. Bauman, the JSC Russian Venture
Company and Fund for the Promotion of the Development of Small Forms of
Enterprises in the Scientific and Technical Sphere acting as the founders.
Viktor Vekselberg was appointed the Fund President.
The Law provides that the Management Company will have broad
powers. In particular, the powers of the Management Company include not only
general organizational management and activity coordination within the frames
of the Skolkovo project, but also the following issues, which generally fall
within the powers of local
authorities under the current Russian legislation:
- Preparation and approval of town-planning document regarding
the Skolkovo Center, expert examination of design documentation, issuance of
permits for construction and commissioning real estate into operation on the
territory of Skolkovo Center.
- Providing permits for conditionally permitted type of use of
land plots or capital construction facilities.
- Organization of the construction and operation of residential
buildings, infrastructure, roads, providing housing.
- Organization of educational and medical activities on the
territory of Skolkovo Center, etc.
The Management Company may delegate some of its functions to
its subsidiaries, except the functions listed below:
- making decisions on granting (or recalling) the project
member status and maintaining the register of project members;
- submission of documents for reimbursement of customs duties;
- approval of documents containing rules of the Skolkovo
project and other documents required to carry out the functions of the
Management Company.
Changes in the Management Company’s statutory documents are
to be performed by approval with the Commission under the President of the
Russian Federation on modernization and technological development of economy of
Russia. The Management Company shall post annual reports on its activities on the
Internet.
Financial support of the Management Company will be from its
own funds, the federal budget and other sources. In particular, Resolution No.565
of the Russian Federation Government dated July 26, 2010 provides allocation of
3,991 million Rubles to the Management Company for 2010 in order to provide for
the basic arrangements on establishing the Skolkovo Center.
Special Migration Rules
The project participants will be able to engage foreign
citizens for purposes of implementing the project without the need to execute
invitations for entry into the Russian Federation and obtain permits for using foreign
employees.
Work permits will be issued to foreign employees through the
Management Company and will not be subject to quotas established by the Government
of the Russian Federation. Permits will be issued for the period equal to the
validity terms of agreements concluded with such foreign citizens but at most
for 3 years starting from the date of entry into the Russian Federation.
Particulars of Regulating Town Planning Activities
As regards the territory of the Skolkovo Center, the residential
master plan (the “Master Plan”) and Land Use and Development Rules (the “Rules”)
have been replaced with the approved special documents containing information
to be included in the Master Plan and the Rules (the “Special Plans”). There
will be no public hearings with respect to the Special Documents, layout design
and survey plan. The abovementioned documents are to be approved by the
Management Company rather that by the local authorities.
In addition, the draft Law contains a mechanism allowing the
Government of the Russian Federation to further introduce special rules at the
Skolkovo Center for providing technical conditions and determining the fee amount
for connection to heat, gas, water supply and electric power networks.
Rights to Real Estate Items
Pursuant to the Law, the Management Company will own the land
parcels comprising the Skolkovo Center territory and residential premises being
part of the center’s infrastructure.
The Management Company will not be granted the right to sell
land parcels and residential premises. It will be entitled only to lease out
the parcels and residential premises to the project participants.
Restrictions on Powers of the Government and Local Authorities
Powers of the government authorities of the constituent
entity of the Russian Federation and powers of local authorities to be
exercised by the Management Company (as specified above in the “Management Company”
section), as well as powers to reserve and withdraw land parcels for state
needs of the constituent entity of the Russian Federation, to establish administrative
liability for violating statutory legal acts of the constituent entity of the Russian
Federation and local authorities, to determine area planning schemes of the
constituent entities of the Russian Federation, and a number of other powers are
not exercised on the territory of the center.
Additional information
Should you need more detailed information on issues covered
in this publication or on our services, please contact Andrey Savin in our
Moscow office at asavin@cls.ru or by phone
at +7 (495) 970-1090; or Oxana Kovaleva in our St. Petersburg office
at okavelava@cls.ru or by phone at +7
(812) 346-7990. This
review covers only a portion of issues related to the topic. The purpose of
this review is to provide our clients and other interested parties with
information on changes in the legislation which may, to a certain extent,
affect their business or interests. This review is not a legal opinion and does
not substitute required legal consultations or opinions on certain issues. Download this Alert in PDF Format | 
