Development of single-industry cities in Komi is connected with the support of township-forming companies and small and medium business, as well as with the creation of new branches of industry, services, single-industry cities’ investment attractiveness, implementation of major and minor industrial and infrastructural investment projects including projects under the establishment of priority social and economic development areas (TOSER).

Creation of TOSER in single-industry cities will release social tension and contribute to their economy development and diversification on account of:

  1. intensive use of natural resources
  2. growth of area investment attractiveness and new investors’ fostering including foreign investors
  3. new regular and short-time jobs not related with township companies’ activities, new jobs also being created by small and medium enterpreneurship
  4. employees’ average monthly wages growth and
  5. local budget tax revenues’ increase.

Establishment of Yemva priority social and economic development area has been enacted by the Decree of the Government of the Russian Federation No. 267 from March 6, 2017. The Government of the Republic of Komi is also exploring the issue of establishing TOSER in other single-industry cities of the Republic of Komi.

Preference to the TOSER residents in the Republic of Komi 

 

Tax rate

Tax relief

Federal budget

Republican budget

Federal budget

Republican budget

Federal taxes

1. Company income tax1

3%

17%

0% within 5 tax periods (years) beginning with tax period of the first profit

 

Not less than 5% within 5 tax periods (years) beginning with tax period of the first profit;

Not less than 10% within next 5 tax periods (years)

2. Royalties2

% or a fixed price from the cost or amount of extracted resources of certain type

-

Federal budget: applying the reduction factor characterizing a mining area ( ):

  1. 0 ‒ within initial 24 tax periods (months)
  2. 0.2 ‒ from 25th to 48th (inclusive) tax periods
  3. 0.4 ‒ from 49th to 72th (inclusive) tax periods
  4. 0.6 ‒ from 73th to 96th (inclusive) tax periods
  5. 0.8 ‒ from 97th to 120th (inclusive) tax periods
  6. 1 ‒ in the next tax periods

 

Tax rate / assessment rate

Tax benefit / assessment benefit

Federal budget, fund

Republican budget, Municipal budget

Federal budget, fund

Republican budget, Municipal budget

Regional and local taxes3

3. Corporate property tax

-

2.2%

-

0%

4. Land tax

-

% from the land-plots’ cadastral values

(up to 1.5%)

-

0%

Insurance contributions4

Pension Fund of the Russian Federation

26% 

-

6%5

-

Social Insurance Fund of the Russian Federation

2.9%

(1.8% for foreign citizens)

-

1.5%

-

Federal Statutory Health Insurance Fund

5.1%

-

0.1%

-

  1. Tax Code of the Russian Federation (part two) No. 117-FZ, article 284 from August 5, 2000. Tax rates (item 1.8), article 284.4. Specifics of applying tax rate in consideration of tax base to the tax payers having the TOSER resident status.
  2. Tax Code of the Russian Federation (part two) No. 117-FZ, article 342.3 from August 5, 2000. Order of specifying and applying the factor characterizing a mining area.
  3. Federal Law No. 473-FZ from December 29, 2014 “On the priority social and economic development areas in the Russian Federation”, article 17. A special legal regime of conducting business or other activities in TOSER, item 8.
  4. Tax Code of the Russian Federation (part two) No. 117-FZ, article 427 from August 5, 2000. Reduced rate of insurance contributions.
  5. Reduced rates are applied to the insurance contributions payers within 10 years from the day of the TOSER resident status obtaining, starting from the 1st day of the month next to the month of the status obtaining, the status being obtained not later than 3 years from the day of the TOSER foundation.

The Decree of the Government of the Russian Federation No. 709 from July 29, 2014 defines the criteria of assigning the single-industry city status to settlements. The list of Russian single-industry cities is annually kept up to date considering these criteria.

The list of single-industry municipalities of the Russian Federation (single-industry cities) including Vorkuta and Inta municipalities, Yemva and Zheshart municipal urban settlements of the Republic of Komi was approved by the Decree of the Government of the Russian Federation No. 1398-r from July 29, 2014.

Single-industry cities of the Republic of Komi. General description (by January 1, 2017)

Single-industry city

Vorkuta

Inta

Zheshart

Yemva

Municipality status

urban district

urban district

urban settlement

urban settlement

Number of settlements in a municipality

16

23

2

10

Distance to the administrative centre of the Russian Federation constituent, km

1,030

780

130

120

Resident population, thousand people

80.1

29.0

7.5

13.0

A single company of a city

JSC Vorkutaugol

JSC Intaugol Mine

Zheshart Timber Mill LLC

SLDK Severny Les LLC,

Plitny Mir LLC (the Vladimir Region) as a lessee

Year of the company foundation

1931 (2003)

1965 (2010)

1946 (2013)

1971 (2013)

Core business

05.10.14

underground anthracite mining

05.10.14

underground anthracite mining

16.21.1 Manufacturing of plywood, wooden plywood boards and similar sandwiched materials, wooden and other lignified boards

16.21.1 Manufacturing of plywood, wooden plywood boards and similar sandwiched materials, wooden and other lignified boards

Main products

coal, coal concentrate

D-grade steam coal (long-flame coal)

Plywood and fiberboards

Hard fiberboards

Number of the company employees, share in municipal companies’ staff payroll, %

21.1

13.1

38.9

5.0

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