Special Administrative Regions of the Russian Federation: Long-awaited changes

KPMG Review

KPMG Review

In light of the recent developments, Russian businesses face many challenges related to continued operation of foreign companies in their group structure. One of effective ways of restructuring is, undoubtedly, re-domiciliation of the company to a SAR.

Following the February amendments to the SAR regime, on 11 March 2022 the State Duma of the Russian Federation adopted two draft laws (No. 84991-8 and No. 84923-8) in the first reading that introduce more changes for International Companies (ICs) and International Holding Companies (IHCs) in the SARs of the Russian Federation on the Russky Island and Oktyabrsky Island.

These draft laws offer simplified conditions for registering companies in the SARs and getting the status of an IHC. They also make certain long-anticipated changes to the SAR regime regulation – they formulate preferential tax rules aimed at supporting businesses (we have previously discussed them here).

The KPMG Review attached below observes the key changes, in particular: expansion of the list of companies that can get the IHC status; additional tax benefits in the SARs of the Russian Federation; terms of use of the additional tax benefits by IHCs; and other important changes to the Russian SAR regime.