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Everything for the investor: what kinds of investment terms are provided for the residents of the IR «Primorye»

         Today, in the Vladivostok gambling zone, investors are invited to consider four free land plots where they can implement their entertainment projects and significantly expand their influence in the Asia-Pacific region. As you know, this year the Russian side uses Auction processes to select new investors for the projects, thereby guaranteeing, transparency and common selection criteria’s for all companies.

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Preliminary results of the Auction will be announced on August 28th, however, the (PKDC) Corporation reserves the right to prolong the Auction - organizers are primarily looking for the major players of the global gambling industry, offering them competitive, preferential terms, agreements, support and co-operation to realize positive prospects for the future.

Infrastructure is created by the Russian side

The investors don’t pay for the construction of engineering and transport infrastructure. So, these site works, necessary for project realization, will be organized by and carried out by the contractor organization (PKDC). Work begins upon conclusion of an ‘investment agreement’ with an investor’s company. As a result, at the moment of commissioning, investors will be provided with a land plot of the necessary area to which all engineering networks will be connected.

Tax benefits

Preferential Tax benefits for investors are stipulated both at the federal and regional levels. For residents involved in the development of a resort it is promised favorable lease terms and extremely favorable taxes versus gross gaming revenues in exchange for creating jobs and developing the area’s tourism industry.

Russia is using a process similar to that used by Singapore to select casino companies and says it will implement “strict international practices”, for example against money laundering and illegal money lending.

Also there is largely advantage - a minimum gambling tax charge. Everyone knows that Russia has the world's lowest tax rates on gambling. Using the example of the casino Tigre de Cristal, it can be calculated that the amount of taxes for the first year was 130 million rubles: for each gaming table per month the investor pays 125 thousand rubles, for a slot machine - 7,5 thousand rubles.

In the Auction Documentation, for future facilities on free land plots there are technical specifications that require a certain number of tables and machines to be installed on their territory, however, the Russian government provides for the possibility to change the number of gambling devices (Tables and Slots) dependent upon the demand.

In addition, there are other benefits upon completion of its facility. Specifically, this refers to property tax, which, according to the laws of the Freeport of Vladivostok, is 0% from the date of commissioning for five years, the next five years - 0.5%, and thereafter, the interest returns to its standard rate -2.2 percent.

Special regimes

From August 1, according to the law on the Freeport of Vladivostok, tourists are able to obtain a visa within 4 days after registration on the Russian Foreign Ministry's website and arrive to Primorsky Krai (and five other regions of the Far East) by a simplified visa for 8 days. According to experts' forecasts, such a measure will positively affect the growth of tourists of MICE-industry as well as the casino players.

The Visa Policy of the state is valid for tourists from 18 countries such as Brunei, India, China, the DPRK, Mexico, Singapore, Japan, Algeria, Bahrain, Iran, Qatar, Kuwait, Morocco, UAE, Oman, Saudi Arabia, Tunisia and Turkey. Consular fees are not charged - the visa is free and valid for 30 days from the time it is issued.

Primorsky Territory and the People's Republic of China have already been operating with a visa-free regime for 15 days for organized touristic groups of at least 5 people.

The special regime can be attributed to the fact that the objects of the integrated entertainment resort "Primorye" are recommended to the federal authorities as a project where it is necessary to enter a Tax-free regime.

Not long ago, the head of the Federal Agency for Tourism Oleg Safonov supported the idea of introduction of a Tax-free regime in the IER. Primorsky Territory Administration have already sent federal government the list of amendments to the State law in order to allow foreign investment projects to have Duty-free shops on their sites.

Access to qualified human resources

The tourist sphere has a multiplicative nature and provides a fairly large range of vacancies. In connection with the fact by 2025 the IER will directly employ around 20 thousand people and indirectly employ more than 30 thousand people in related industries, it is necessary to plan and continuously provide qualified staff.

At the end of 2016, the resort developer decided to create a United Training Center in cooperation with the largest recruitment holding company in Russia - ANCOR. According to Andrey Folomeev, head of the Primorsky Krai Development Corporation JSC, the new structure created in the form of a management company will assist foreign investors to educate and recruit highly qualified staff from around Russia and Soviet Union countries to work in the IER.

Note that the population of Vladivostok has 599 thousand people - as much as in Macau (612,127) and Las Vegas (632,912) now. If we take into account the population of the “Big Vladivostok”, then it goes up to a million people (1.2 million). The population of the Primorsky Territory is about two million people (1.9 million).

The human resource potential in the Primorsky Territory is quite high compared to other regions of the Far East. Two large universities – Far Eastern Federal University on the Russian Island (opened in 2012 for the holding of APEC Summit) and Vladivostok State University of Economics and Servise - are engaged in high level education. Annually, they turn out 40 thousand graduates of different specializations and also with knowledge of foreign language accreditations.

Guarantees of the Government of the Russian Federation and a transparent management system

The varied incentives granted to investors are guaranteed by the Government of the Russian Federation. Investors work directly with government agencies whose objective are to develop and enhance the Russian economy.

The general developer of the project of the integrated entertainment resort Primorye is JSC Development Corporation of Primorsky Krai. This organization is wholly owned by the Primorsky Territory Administration, the highest regional authority.

The PKDC JSC is included in the list of four institutes established in Primorsky Krai to assist business and support investors (other Primorsky Krai Investment Agency, Primorsky Territory Guarantee Fund, Agency for Strategic Initiatives to Promote New Projects in the Far Eastern Federal District).

The primary goal of the Corporation is design, construction and commissioning of networks and infrastructure facilities, as well as increasing the investment attractiveness of the resort.

Other major responsibilities of the Corporation is to assist investors in adjusting the work mechanism used by foreigners to the realities of the Russian legislation system. To ensure that investors have continuous assistance processing documents, access to these documents and the management decisions pertaining to them, provision of other necessary and appropriate services upon request to ensure comfortable interaction of residents and authorities with a view to obtaining a mutually beneficial result.

The development of the integrated resorts in the Russian Federation is a new type of activity, therefore, as the interests of the investors is our first priority; any identified regulatory issues; that put investor’s interests at a competitive disadvantage; can be resolved during the process of work to the benefit all stakeholders (the investors as well as the state). Finally, whilst the Russian Gambling Legislation is flexible it should be noted that tax rates, lease terms and obligations established by the investment agreement are fixed.