Duma Bill Aims for Tech Parks
Legislation is under way to set up industrial parks to attract technology firms.
Jun 10, 2005
In a bid to attract foreign technology investment, the State Duma on Thursday approved the first draft of legislation to set up industrial parks offering tax incentives.
But the bill has drawn criticism from domestic computer firms, which say it would give privileges to foreigners at the expense of local companies.
Despite its highly educated population, Russia is one of the world's least innovative large countries. Its number of patents per head has diminished since 1993. Companies find it difficult to defend their intellectual property in the courtroom. In addition, many researchers have moved abroad for better research opportunities and pay.
The government's plan would create a number of research zones of up to 2 square kilometers and industrial zones of up to 10 square kilometers.
Under the new legislation, which requires two further votes before it becomes law, companies located in an industrial zone would have to invest at least 10 million euros ($12.2 million) over the course of 20 years, including at least 1 million euros in the first year.
There is no minimum investment required for the research zones.
Firms operating in both types of zones would enjoy favorable tax rates, but those tax advantages would expire after 20 years.
All industrial parks would have to be approved by the federal government, Interfax reported. The Economic Development and Trade Ministry would manage the zones.
"International experience teaches us that ... the whole advantage of setting up parks like these is to increase cooperation among companies located there, rather than have the government call the shots," said Valentin Makarov, president of Russoft, an association of 75 computer and data firms operating in Russia, Belarus and Ukraine.
"The whole idea" of confining tax preferences to specific geographic zones for companies producing non-tangible services "would be very hard to enforce," Makarov said.
Large companies might also be tempted to set up subsidiary companies in the zones as a means of tax evasion, he added.
But the bill has drawn criticism from domestic computer firms, which say it would give privileges to foreigners at the expense of local companies.
Despite its highly educated population, Russia is one of the world's least innovative large countries. Its number of patents per head has diminished since 1993. Companies find it difficult to defend their intellectual property in the courtroom. In addition, many researchers have moved abroad for better research opportunities and pay.
The government's plan would create a number of research zones of up to 2 square kilometers and industrial zones of up to 10 square kilometers.
Under the new legislation, which requires two further votes before it becomes law, companies located in an industrial zone would have to invest at least 10 million euros ($12.2 million) over the course of 20 years, including at least 1 million euros in the first year.
There is no minimum investment required for the research zones.
Firms operating in both types of zones would enjoy favorable tax rates, but those tax advantages would expire after 20 years.
All industrial parks would have to be approved by the federal government, Interfax reported. The Economic Development and Trade Ministry would manage the zones.
"International experience teaches us that ... the whole advantage of setting up parks like these is to increase cooperation among companies located there, rather than have the government call the shots," said Valentin Makarov, president of Russoft, an association of 75 computer and data firms operating in Russia, Belarus and Ukraine.
"The whole idea" of confining tax preferences to specific geographic zones for companies producing non-tangible services "would be very hard to enforce," Makarov said.
Large companies might also be tempted to set up subsidiary companies in the zones as a means of tax evasion, he added.