Government will ease the localisation requirements for new Special Investment Contracts

Government will ease the localisation requirements for new Special Investment Contracts


 

Interfax.- The localisation requirements for automobile production, formulated within the scope of the former framework of the Special Investment Contracts (SPIC 1.0) are not expected to be extended on the new SPIC 2.0 in the automotive industry.

The relevant changes to government decree No. 661 dated 25 May 2019 have been prepared by the Ministry of Industry and Commerce. The project document has been published on the regulation.gov.ru website. Decree No. 661 sets the localisation requirements on the localisation of car production, including conclusion purposes of Special Investment Contracts.

As stated in the explanatory note for the document, harsh measures taken on localisation at the level of 7000 points in accordance with the former SPIC do not seem appropriate concerning the specialisation of such investment contracts for the localisation of specific unique technologies. In the meantime, the volume of industrial production, implemented under such contracts, can not keep up with the provision of the necessary conditions for the localisation of technological operations, maintaining a minimum level of 7000 points.

As told by the Ministry of Industry and Commerce to Interfax, the localisation level requirement will be fixed individually as per contract under the SPIC 2.0, the conclusion of which depends on the implementation of future technologies.

“The draft resolution specifies the extension of the localisation requirements in the amount of 7,000 points only to contracts for the production of traditional cars under the SPIC 1.0 mechanism. Meanwhile, contracts under SPIC 2.0 will be concluded for the development of future technologies, the localisation level for which will be fixed individually” – as stated by the Ministry of Industry and Commerce.

Under the SPIC mechanism, the investors come under the obligation to implement the investment projects on the basis of modern technologies with the aim to create mass industrial production. The government, on the other hand, will ensure the stability of the conditions for the implementation of the projects, including the taxation procedures at a federal and a regional level.

The Special Investment Contract mechanism has been implemented within the framework of the updated SPIC 2.0 version since 2020. The parameters of the updated Special Investment Contract will provide for the absence of localisation requirements for a minimum investment volume and a long period of validity: up to 15 years for projects with an investment volume of up to 50 billion rubles and up to 20 years for projects worth more than 50 billion rubles.