Record Investments: Investment in Moscow Reached RUR 3 Tn

The business preferences provided by the city
are in no small part to thank for this.
During the first three quarters of the current year, the investment in fixed assets in Moscow amounted to RUR 2.9 tn, which is 8.9% higher than in 2018. This is a record for the city economy. Over the past 8 years, investment in fixed assets increased more than twice, in comparable prices. Today, Moscow is accounting for 15% of all Russian investments in fixed assets and approximately a half of foreign direct investments (FDIs) in Russia.

According to the Bank of Russia, the volume of accumulated FDIs in Moscow amounted to USD 251.7 bn, as of October 1, 2019. Investors arrive in Moscow from around the world, major ones coming from Germany, Finland, France, Italy, and Austria. Most often, foreign businesses invest in the companies engaged in financial and insurance activities, in trade, in industry and high technology sectors, as well as in real estate.

One of important investment drivers is the targeted investment program for Moscow development. The program volume planned for 2020–2022 exceeds RUR 2 tn. The city will use these funds to implement the priority projects in the fields of transport, social services and improvement. Today, each ruble invested by the city in the infrastructure development accounts for more than three rubles of private investment.

The growth of investor activity in Moscow is also confirmed by the record volumes of real estate construction: according to preliminary estimates, ca. 10.4 m sq. m of property were built and commissioned last year, including 4.5 m sq. m of housing.
Aleksandr Prokhorov
Head of the Moscow Department
of Investment and Industrial Policy
"Competent international and national ratings confirm that Moscow has a favorable investment climate. For example, Russia has moved up 3 ranks to take the 28th place in the Doing Business ranking in 2020, leaving Japan, France, and Switzerland behind. To compile the rating, experts analyze the business climate in two cities only (Moscow and St. Petersburg), so the country's rate 70% depends on the capital. Moscow also tops the National Investment Climate Ranking among Russia's constituent entities by the Agency for Strategic Initiatives."

Effective Help

Investment in fixed assets in Moscow increased in no small part due to the business support measures provided by the city government. The actively investing companies granted the statuses of a technopark, an industrial complex, and a technopark anchor resident can reduce the regional tax burden by 17–25%. A similar mechanism is applied to new investment projects.

Today, 116 Moscow companies are entitled to various benefits: 53 industrial complexes, 36 technoparks, 13 anchor residents, 13 investment priority projects, 1 motor vehicle manufacturer. Over the past five years, the investments made by the companies having the industrial complex, industrial park and anchor resident statuses amounted to RUR 95.6 bn. The number of employees of the enterprises assigned with these statuses exceeds 111,000 people.

The Technopolis Moscow Special Economic Zone residents are also granted various preferences. They can reduce the regional tax burden by 47%. In addition, within the SEZ, a free customs zone regime is applied: all the goods and equipment imported to the special territory are exempt from customs duties and taxes. The residents can establish local production using both vacant land plots in Zelenograd, and existing production, laboratory and office areas in Tekstilshchiki.

In addition to the SEZ areas, investors can acquire land for large-scale investment projects without bidding. Since 2016, the city authorities have approved 23 industrial investment projects and allocated 32 plots for project implementation. 618,000 sq. m. can be used for capital construction, the planned volume of investments is RUR 18.2 bn.

On January 1 of this year, another support measure was introduced, namely the investment tax deduction. It is granted to the companies that are located in Moscow and have the Moscow investor status. To determine the maximum investment tax deduction, the profit tax to the city budget for organizations that are Moscow investors is determined as 12.5% (category 1) and 8% (category 2). The standard rate of income tax to the city budget is 17%. The requirements and procedure for obtaining the Moscow investor status will be determined in the near future by the city government.

Moscow also provides various forms of financial support: subsidizes interest rates on loans and leasing payments, grants soft loans in an amount from RUR 10 to 200 m at 2–5% per annum, partly subsidizes the utility connection costs and much more.

All the business preferences currently provided by the city significantly contribute to a favorable investment climate. Today, entrepreneurs can establish production in Moscow and invest in the city economy under favorable conditions.
Corporate Issue, Moscow Department
of Investment and Industrial Policy
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