The Kaliningrad region is the most western region, separated from the mainland of the Russian Federation. Due to its geographical and political location, especially after Poland's and Lithuania's joining the EU, the Kaliningrad region is gaining a new challenge of extending and developing co-operation with the European countries in various fields, first and foremost, in economics. The following special features of our region can help implement these plans:

• The unique geographical position
• The only enclave region of Russia located in the centre of Europe
• Vast ramified transportation network
• The only all-the-year-round navigable Russian sea port on the Baltic Sea coast
• Highly qualified cheap labour force
• Special Economic Zone
• Taxation privileges
• Flexibility and transparancy of the local authorities, their adherence to the course of reforms
• Advantages of the local legislation
• Constant strivings on the part of the local authorities to improve the investment climate
• Experience of cooperating with European countries
• The springboard for cooperation with the whole of Russia
• Fusion of the European and Russian cultures
• Lower level of criminality as compared to the other Russian regions
• Fairly high social stability

All the territory of Kaliningrad and the major part of the region belong to the Special Economic Zone (SEZ). On the 22nd of January 1996, the Federal Law of Russia was adopted, namely "On the Special Economic Zone in the Kaliningrad region". Its creation was aimed at providing most favourable conditions in order to accelerate the social and economic development of the region, to raise the living standard of the population on the basis of economic, trading, scientific, technical collaboration with foreign countries, as well as on the basis of foreign investment encouragement, overseas technologies involvement and their management experience adoption. For years running, after the SEZ creation, sustainable development tendencies were witnessed in terms of promoting competibility and economic activities of the city. The economic take-off of the region is connected with attracting large overseas and domestic investments into the Kaliningrad region economy. At present the Russian government is engaged in the discussion of the new updated version of the Federal law "On the Special Economic Zone in the Kaliningrad Region", which is aimed at the increase of investment activity in the region.

The Special Economic Zone enjoys the special advantageous regime established for investment and entrepreneurship activities on account of its specific geographic position and the national concerns and preferences of the Russian Federation. The SEZ mechanism, which comprises the peculiarities of using the system of privileges, creates the conditions for doing away with internal and external obstacles and snags on the way of foreign investments into the regional economy and has certain edges as to imposing Customs duties to be paid while going through the Customs and clearing the commodities being imported or exported.

Customs allowances and privileges

1. The goods, manufactured in the Special economic zone (the fact that is verified by the certificate on the goods origin) and exported to the other countries, are exempt from Customs duties and other charges while going through the Customs and being cleared (except the Customs fees for drawing up the Customs clearance papers).
2. The goods, imported from other countries to the Special economic zone, are exempt from the Customs import duties and other charges while going through the Customs and being cleared (with the exception of the Customs fees for drawing up the Customs clearance papers). As to some particular types of commodities and services, they can be subject to special measures of economic policy (i.e. the measures to be taken for qualitative state control over foreign trade activities);
3. The goods, manufactured in the Special economic zone (the fact that is verified by the certificate on the goods origin) and exported to the other parts of the Customs territory of the Russian Federation (also to the territory of the Customs Union), are exempt from the Customs import duties and other charges while going through the Customs and being cleared (with the exception of the Customs fees for drawing up the Customs clearance papers). The above-stated goods are not subject to economic policy measures (i.e. the measures to be taken for the non-tariff state control over foreign trade activities);
4. The goods, imported from other countries to the Special economic zone and afterwards exported to the other parts of the Customs territory of the Russian Federation, and also onto the territory of the Customs Union (with the exception of the commodities and goods which are processed or recovered in the Special economic zone and, thus, considered to be manufactured in the Special economic zone), are subject to the Customs import duties and other charges while going through the Customs and being cleared. The above-stated goods can be subject to economic policy measures (i.e. the measures to be taken for the non-tariff state control over foreign trade activities);
5. The goods, imported from other countries to the Special economic zone and then exported to foreign countries (both processed and unprocessed commodities) are exempt from the Customs duties and other charges while going through the Customs and being cleared; there are no quantitative limitations and restrictions whatsoever for importing or exporting the named commodities.

The provision of dutyfree import privilege for importing the commodities helped replenish and saturate the consumers' market with the goods, increase the overseas trade turnover significantly. The small and medium-sized entreprenership activities have been thriving. For the duty-free commodities export privilege to be practically used (which stands for the commodities manufactured in the region), the "Regulations for identifying the origin of goods from the Special economic zone in the Kaliningrad region" are in current use.

Regulations for identifying the origin of goods from the Special economic zone in the Kaliningrad region were set up in accordance with Federal law ? 13-?? for the Special Economic Zones (SEZ) dated 22-01-96 and Russian Federation Law ? 5003-1 dated 21-05-93 "On a Customs Tariff".

Regulations for identifying the origin of goods from the Special economic zone

1. A commodity is considered to be manufactured in the Special economic zone, if the added value of its processing (recovery) amounts to not less than 30%; and as to such a category of goods as electronic devices and complex household equipment and utensils, their added value should be not less than 15%, the processing (recovery) of a commodity causes the change in the commodity code according to the Customs classification. The Regulations for identifying the origin of goods from the Special economic zone, which are considered to refer to complex household equipment, are stipulated by the Russian Federation State Customs Committee upon the proposal of the regional Administration.
2. The goods are considered to have been subjected to adequate recovery on the territory of the Special economic zone in case there are the following simultaneous conditions available:
• there is the change in the classification code of a commodity according to the Russian Federation Customs Nomenclature of the foreign economic activities on the level of any of the four initial signs; and for certain categories of goods this change can be on the level of the fifth sign, which was caused by the goods recovery;
• the added value of the processing (recovery) of a commodity amounts to not less than 30% (for a number of commodities the figure is 15%).
3. The following operations/measures/processes are not considered to comply with the criterion of adequate processing:
• the operations for providing the safety of goods during their storage or transportation;
• the measures for getting the commodities ready for sales and transportation (the splitting of the consignment of goods, the making up of shipments, grading, sorting, re-packing);
• the processes of mixing the goods (their components) without altering the goods characteristics significantly and without making them differ greatly from the features of the initial components or goods;
• ordinary operations of mounting, fitting, installing.
4. The document that verifies the origin of a commodity from the Special economic zone is the Certificate of the Origin issued by the Kaliningrad Chamber of Commerce and Industry (KCCI) upon the coordination and agreement with the Kaliningrad Customs Authorities.

In accordance with this document, a commodity is considered to have been manufactured in the Special Economic Zone, if the added value of its processing is not less than 30 per cent; as to the commodities which can be referred to electronic devices and complex household equipment, this figure amounts to 15 %.

All the goods, manufactured in the SEZ, are subject to compulsory certification. The certificate of commodity origin is issued for the commodities or articles if they have been produced completely or otherwise subjected to sufficient processing/recovery on the SEZ territory. A certain established procedure of getting such a certificate has been adopted in the Kaliningrad region.

Regulations for getting a certificate about the origin of goods from the special economic zone in the Kaliningrad region were approved and adopted in accordance with Resolution ? 296-?/01-14/1365 dated 31-12-1998 of the Kaliningrad regional Administration and the Russian Federation State Customs Committee.

Regulations for getting a certificate about the origin of goods from the special economic zone in the Kaliningrad region

1. An enterprise is to define the codes according to the Customs nomenclature of the foreign economic activities all by itself (or with the help of the Customs officers being in charge of the Customs declaration procedures) for articles and materials which are to be imported to the territory of the Kaliningrad region for the purpose of their processing or developing. Also the classification code of the finished products is determined. An enterprise is to calculate all by itself the amount of added value of the processing (recovery).
2. In order to carry out the expertise, an enterprise is to address the expert firm or company for the purpose of obtaining the expertise act certificate.
3. In case of a controversy (as to the code change), an enterprise applies to the Kaliningrad Customs Authorities for the purpose of getting the juridical consultation or the resolution in the written (printed) form.
4. Having the expertise act certificate (and the resolution of the Customs committee), an enterprise applies to the Kaliningrad Chamber of commerce and industry for the purpose of obtaining the Certificate of Origin.

In order to make the city and region more attractive for investments, a number of documents have been approved and adopted on the regional and municipal levels, with these documents being designed for advantageous privileged taxation for organizations implementing investment projects in the Kaliningrad region.

Scheme of privileged taxation according to the regional and local legislation

REGISTRATION OF ENTERPRISES

In order to register an enterprise it is necessary to appeal to the territorial taxation body corresponding to the legal address, i.e. the Inter-district Inspection of the RF Ministry for taxes and levies in Kaliningrad and submit appropriate documents.

List of documents to be presented for the State registration of legal entities to the Inter-district Inspection of the Russian Federation Ministry for taxes and levies in Kaliningrad:

• Statement on the state registration, verified, witnessed and certified by the signature according to Form ?11001, adopted by Ruling ? 439 dated 19-06-2002 of the Russian Federation Government;
• Resolution on creating a legal entity (on setting up a joint venture or an enterprise with 100% foreign investments), which embraces the following matters:
• Resolution on setting up a joint venture with the Russian enterprises or physical persons
• The amount of the registered fund of a joint venture with foreign investments (not less than 10,000 roubles)
• The share of a foreign participant (before registering it is necessary to invest the named sum into the registered fund)
• The surname, first name and patronymic of the representative, authorized to sign the foundation documents on behalf of the firm.
• The foundation documents of the legal entity (the Statutes, the foundation contract)
• The document on the payment of a unified state tax (The state tax equals 2,000 roubles. Only the governmental bodies, the state power structures and trade-unions, registered as legal entities in accordance with the RF Law "On the State Tax", Item 7, Article 5, are exempt from the state tax payment)
• An extract from the register of foreign legal entities of a particular country of origin (or another similar legal proof of the juridical status of a founder - the data on the company's/firm's/legal entity's registration confirmed by a notary: the registration certificate, Statutes, the foundation contract)

List of documents to be presented for the State registration of physical persons to the Inter-district Inspection of the Russian Federation Ministry for taxes and levies in Kaliningrad (in accordance with Law # 129-??, Article 22.1):

• Statement on the state registration, verified, witnessed and certified by the signature according to Form ?21001, adopted by Ruling # 439 dated 19-06-2002 of the Russian Federation Government;
• Transcript of the national passport of a foreign citizen
• Transcript of the permission for temporary stay or that of the residence permit (the document verifying the right of a physical person to stay temporarily or to live permanently in the Russian Federation in the capacity of an individual entrepreneur)
• The document about the state tax payment (400 roubles).

The State registration of legal entities that comprise the commercial organizations with foreign investments takes 5 working days. The legal entities are considered to be registered from the moment of making the adequate notes in the USRLE (Unified State Register of Legal Entities) in accordance with the Law for registration.

List of expenses for registering enterprises

In order to be registered the parties transfer the following sums to the settlement account of the Federal treasury:

• The state tax for the registration - 2 000 roubles
• The harmonization of the enterprise title - 50 roubles (0,5 of the minimum remuneration of labour)
• Obtaining the codes of the All-Russian Classifier of enterprises and organizations - 476 roubles
• Making the stamp and the seal - 350 roubles
• One transcript of the Statutes - 200 roubles
• One transcript of the foundation contract - 200 roubles
• Confirming, attesting and signing the bank cards by a notary - 300 roubles.

Legal address and other particulars of the Federal Treasury Authorities in the Kaliningrad region

Supplementary data:

The founders from such countries as Latvia, Lithuania, Estonia as well as from the countries of the Union of Independant States (i.e. the former republics of the USSR) are to have their documents in both the foreign and Russian languages, verified, witnessed and signed by a notary, and last but not least, they are to be stamped with the special legalization seal, namely apostille.

The founders from other foreign states shall have their intrinsic documents in a foreign language (if these are the transcripts, they should be verified, witnessed and signed by a notary in the founders' country and sealed with an apostille in the Consulate of Russia in their country).

ALLOTMENT OF LAND LOTS

Foreign physical persons and legal entities can have land lots on the territory of the Kaliningrad region only with the right to lease them (with no right for purchasing).

Lease agreements are made in accordance with the market rates on leasing land with the compulsory consideration of the interests and concerns of the Kaliningrad region residents, as well as the factors of efficient rational land use and natural environment protection and improvement.

A land lot lease duration is established up to 50 years with the possibility of further prolongation. The drawing up of the the land lot lease agreement is carried out by the Committee for land resources and land management within the Kaliningrad City Hall.

The agreement and the right for leasing a land lot for the time period of over 1 year are subject to state registration in the Department of the RF Ministry of Justice in the Kaliningrad region.

Lease payment is imposed for the land leased. The size of a land tax and lease payment is established in the form of fixed payments per a unit of land area. The rates of a land tax and lease payment are annually revised. The payers are legal entities, notwithstanding the legal forms of their organization, they can also be foreigners who have been alloted land for leasing on the territory of Kaliningrad.

List of documents to be presented for the state registration of a lease agreement or the right for leasing the real estate:

1. Statement on the registration of a lease agreement or the right for leasing
2. The intrinsic payment document, confirming the transfer of payment for the registration
3. The document verifying/identifying the personality of the applicant (representative)
4. One of the documents certifying the authorities/terms of reference of the persons, who have made an agreement.


For the persons, who have made an agreement on behalf of a legal entity:
• The minutes (or an extract from the minutes) of the general meeting of the founders devoted to electing the executive body of the legal entity
• The decision of the owner about designating the director/manager
• The agreement of the trust management.
5. The lease agreement (all the specimens of the agreement subject to registering, which are compiled in booklets/brochures, signed by the parties; as well as one copy of the agreement)
6. Each specimen of the lease agreement is supplied with the detailed lay-outs (plans) of all the storeys of the building in question, where the premises to be leased are marked/designated, and also the dimensions of the area to be leased are stated.
7. Report of the real estate acceptance-transfer

The basic legal standard documents controlling and maintaining the right for land are the following:

• Civil Code
• Land Code
• "Land Law" of the Kaliningrad region (Articles 21, 22, 27)
• Federal law ? 13-?? for the Special Economic Zone (SEZ) dated from 22.01.96

Additional information:

Approximate expenditures for running a business and standards for the current budget and taxation legislation valid since the 1st of January 2004.

Approximate expenditures for running a business

Standards for the current budget and taxation legislation valid since the 1st of January 2004 (taking into account the particular articles/items of the draft RF Federal Law , the draft Law of the Kaliningrad region )

Contact Information