Lipetsk Industrial-Type Special Economic Zone

1. A Special Economic Zone (SEZ) is a designated area located within the Russian Federation and offering special conditions and incentives for businesses, including exemption from customs duties.

Special Economic Zones are institutions fostering development of the Russian economy as a form of public private partnership, enhancing its competitiveness, diversity and efficiency.

As of today, there are six industrial-type special economic zones in the Russian Federation.

In 2005, Lipetsk was selected by the Ministry of Economic Development as a region to establish an industrial-type SEZ in the Gryazi District

(Russian Government Resolution No.782 dated December 21, 2005).

Initiated by Lipetsk Region Governor Oleg Korolyov, the Lipetsk Industrial SEZ is a large-scale nationwide project focusing on the development of industrial production, innovations, research and infrastructure, and the attraction of national and international investors.

Today, the Lipetsk SEZ hosts a variety of companies from Russia, Japan, Italy, Belgium, Germany, Netherlands, USA, Ukraine, Switzerland and Israel.

As of October 01, 2014, the Lipetsk SEZ had 33 residents. They plan to invest a total of RUB 105 billion, with RUB 24.8 billion already invested. SEZ residents have created 2,524 jobs. Their total revenue exceeds RUB 26.1 billion, including over RUB 5.3 billion generated since the beginning of the year.

Since the Lipetsk Industrial SEZ is a success, local authorities have made a decision to expand its territory with a 1,274 ha plot of land located near Yelets, in the proximity of M4 Don federal highway.

The new section of the Lipetsk Industrial SEZ will give priority to engineering, cars automotive components, agricultural machinery, robotics, textiles, consumer products; home appliances, electronics, optical devices, and medical equipment.

According to forecasts, the Yelets section of Lipetsk Industrial SEZ will attract nearly 50 residents. Investments are estimated to reach RUB 180 billion. New residents are expected to create 13,000 jobs.

The current SEZ area covers 1,024 hectares.

The SEZ operation period is 49 years.

Strategic priorities

Strategic priorities of the Lipetsk Industrial SEZ are robotics, engineering, cars and automotive components, agricultural machinery, home appliances, electronic devices; radio electronics, power equipment, medical equipment, and optical devices.

As of October 01, 2014, the Lipetsk SEZ had 33 residents. They plan to invest a total of RUB 105 billion, with RUB 24.8 billion already invested. SEZ residents have created 2,524 jobs. Their total revenue exceeds RUB 26.1 billion, including over RUB 5.3 billion generated since the beginning of the year.

2. Photo gallery

1. Lipetsk Industrial SEZ layout

2. Opening ceremony of the Lipetsk Industrial SEZ (2008)

3. Lipetsk Industrial SEZ model demonstrated to Prime Minister Vladimir Putin during his visit to the Lipetsk Region (2008)

4. President Dmitri Medvedev visiting the Lipetsk Industrial SEZ (2010)

5. Overall view

6. Road infrastructure

7. Customs office

8. Check point

9. Railway roads

10. Overhead cable tray

11. Yokohama representative inspecting the cable tray

3. Lipetsk Industrial SEZ video

4. Infrastructure

Logistics

The Lipetsk Industrial SEZ comprises:

• Motor roads (10.45 km long, 145,300 sq m)

• Parking lots for cars and 157 trucks

• A railway road (about 7 km) connected with the Kazinka station

Motorways

• 70 km to M4 Don federal highway

• 85 km to M6 Kaspiy federal highway

• 16 km to Orel–Tambov regional motorway

A 24 km bypass road connects the SEZ with M4 Don and M6 Kaspiy federal highways.

Air transportation

The Lipetsk international airport is 35 km away from the SEZ.

Railway roads

Two passenger stations – Lipetsk and Gryazi-Voronezhskie – are located in the proximity of the SEZ ((20 km and 10 km respectively).

The nearest cargo railway stations are:

• Kazinka (0.2 km)

• Gryazi-Orlovskie (8 km)

• The Lipetsk SEZ railway roads are connected with the Kazinka station.

Utility infrastructure

Utility connection points are located near the boundaries of the plots of land occupied by residents. They are offered special utility tariffs and rates. Electric power

• 110/10/10 kV power substation with the capacity of 40 MW

• Additional 220/110/10 kV power substation under construction, with a total capacity to reach 340 MW

• An overhead cable tray Gas

• A gas pipeline with a capacity of 105 mln cbm per year (to be increased up to 1,325 mln cbm per year) Heat

• A heating network with a capacity of 155 Gcal/h Water

• A water supply network with a capacity of 2,000 cbm per day (to be increased up to 6,000 cbm per day)

• A sewerage network with a capacity of 1,000 cbm per day (to be increased up to 6,000 cbm per day)

5. Government support

Tax incentives

• Regional income tax rate:

  • 0% for the first 5 years (7 years if the company produces import substitution goods)

  • 5% for the subsequent 5 years

  • 13.5% after 10 years

• 0% property tax for 10 years

• 0% vehicle tax for 10 years

• 0% land tax for the first 5 years

Other incentives

• 14% social insurance contributions (for residents specializing in R&D)

• 0% customs duties and VAT on imported goods

  • Russian goods are handled as exported goods according to export regulations (with excises paid and no export duties charged)

  • If the goods produced in the SEZ are exported outside of the Customs Union (Russia, Belarus and Kazakhstan), import duties and VAT are not charged

  • If the goods produced in the SEZ are exported outside of Russia, export duties are charged except for foreign goods imported into the SEZ and then re-exported in the same condition.

• Reduced rental rates The rental rate (with no reduction factors applied) is 2% of the cadastral value (about RUB 77,000 per ha).

• Reduction factors:

  • 0.9 if capital investments exceed EUR 10 million

  • 0.7 if capital investments exceed EUR 20 million

  • 0.5 if capital investments exceed EUR 30 million

• No limits on loss carry-forward

• Residents have the right to purchase the rented land. The purchase price is 7.5% of the cadastral value.

• The residents are insured against unfavorable amendments to the Russian Tax Code (if any). SEZ residents do not have to comply with amendments to federal and regional tax laws if such amendments have a negative effect on their business operations (except for excisable goods).

Free customs zone

SEZ residents enjoy a free customs zone regime.

6. Contacts

Lipetsk Industrial-Type Special Economic Zone

General Director: Ivan N. Koshelev

Phone: +7 (4742) 51-51-80

Fax: +7 (4742) 51-51-95

Email:

Deputy Head: Albert V. Sokovykh

Phone: +7 (4742) 23-74-21

Email:

SEZ Development Office

Phone/Fax: +7 (4742) 23-74-39

Email: