Sergei Sobyanin: Moscow’s industrial production index grew 3 percent last year

Sergei Sobyanin: Moscow’s industrial production index grew 3 percent last year
Photo: Photo by the Mayor and Moscow Government Press Service. Denis Grishkin
The city’s tax incentives can decrease tax liability by up to 25 percent.

In 2016, the industrial production index in Moscow grew 3 percent, and investment in fixed assets increased 0.7 percent to 1.7 trillion roubles, announced Sergei Sobyanin at a meeting of the Moscow Government Presidium.

“Fifty-two facilities in Moscow have been assigned a status of technology parks or industrial complexes and received special tax benefits; they also have relevant salary and investment levels. There are about 1,500 companies, which together employ 70,000 people, mainly in high-tech. This is a major part of Moscow’s industry and constitutes its high-tech future. Technology parks employ most of the young people who are creating innovative technology,” the Mayor said.

Two new industrial complexes and a technology park

The city has decided to grant industrial complex status to the following: Avangard Plant and Hamilton Standard-Nauka. Moreover, technology park status was given to the All-Russian Fishing and Oceanography Research Institute.

Tax incentives

Fifty-two territories in Moscow will enjoy special status and tax benefits: 24 industrial complexes and 28 technology parks. These include over 1,450 large, medium and small-sized businesses, which employ about 70,000 people.

The creation of technopolises and industrial complexes is a key to Moscow’s industry development. The city has been providing multifaceted support for enterprises and real sector investors since 2012. The primary tool in supporting technology parks and industrial complexes is tax benefits as well as lower land lease rates.

These tax breaks provide a 10-25 percent tax burden decrease.

 

Tax

Regular Tax Rate

Reduced Tax Rate

For Industrial Complex

For Technology Park

Corporate Tax

17 percent

12.5 percent

12.5 percent*

Property Tax

for industrial facilities — 2.2 percent of balance-sheet value;

for commercial facilities and offices — 1.4 percent of cadastral value

(in 2017)

50 percent on permanent property

0 percent on permanent property

Land Tax

1.5 percent of cadastral value

20 percent of the tax liability

0.7 percent of the tax liability

Land lease rates

0.01–1.5 percent of cadastral value

0.3 percent of cadastral value

0.01 percent of cadastral value

 

*for management companies and anchor tenants in technology parks

 

Technology parks and industrial complexes have to meet the following requirements to qualify for tax incentives:

— to use the land rationally and purposefully (for innovation activity and industrial production);

— to invest in production development and maintain economic viability;

— to pay reasonable salaries.

 

JSC Avangard Machine Building Plant industrial complex

The Moscow Machine Building Plant Avangard, founded in 1942, is located in the Voikovsky District (33 Clara Zetkin Street). Since 2002, it has been part of the Almaz-Antei Air Space Defence Concern and specialises in the design and production of aerospace defence systems and related products, specifically anti-aircraft missiles and target missiles.

At present, the plant employs some 2,800 people, with 600 additional jobs to be created by 2019. The capital saved to tax breaks, will go into renovating technical equipment and upgrading its infrastructure.

 

CJSC Hamilton Standard-Nauka industrial complex

Founded in 1995 by Scientific Production Association Nauka of Russia and Hamilton Sundstrand Holdings, Inc. of the United States, specialises in production of heat exchangers for environmental control systems in commercial aircraft.

Over 98 percent of its production is exported and used by the leading aircraft manufacturing companies — Boeing, Airbus, Embraer, Bombardier, Tupolev, Il and others.

Its production facilities are located in northern Moscow at 19 Petrovsko-Razumovsky Proyezd, Bldg.1. Currently, the company employs 166 people. The tax breaks money will be used to update industrial facilities, and upgrade ventilation systems to lower the noise level in manufacturing plant as well as on new utility systems to cut energy and water costs.

 

Krasnoselsky Technology Park

The Krasnoselsky Technology Park was based on the All-Russian Fishing and Oceanography Research Institute, which employs 474 people.

Today, the institute is a leading Russian scientific organisation carrying out research in commercial fishing.

The technology park is divided into two parts. The scientific and research facilities are located in the Krasnoselsky District (17, Verkhnyaya Krasnoselskaya Street) while industrial production is in the Zapadnoye Degunino District (7 Izhorskaya Street).

The money, saved thanks to tax breaks, will go into the modernisation of equipment and the reconstruction of scientific and research laboratories.