Special Administrative Region

Conditions for obtaining IHC status:

1. An international company is registered as a result of the re-domiciliation of a foreign organization which was established before January 1, 2018

2. The controlling persons (more than 15%) of the re-domiciled foreign organization obtained such status before 2017 (does not apply to public companies and persons subject to sanctions)

   • financial statements of the foreign organization for the last complete financial year before the date of registration
   • auditor’s report with a positive conclusion
   • information about the controlling persons of an international company (more than 15%)

   When registering an international company within the period from March 1, 2022 to December 31, 2023, documents and information (excluding information about controlling persons of the international company) can be provided no later than 12 months from the day of registration.

3. Within 15 working days from receiving the IC status, submit to the tax office: Does not apply to the international company registered under the procedure of redomiciliation before March 1, 2022 inclusive. (Not applicable to an international company registered by way of redomiciliation before 01.03.2022 (inclusive))

An IC loses its IHC status:

1. in the event that the IHC adopts a decision on reorganization in the form of a takeover or merger with a company other than the IC
2. if there is a change in the IC’s controlling persons within 1 year (does not apply to public companies and entities under sanctions)

3. if it is deprived of its IC status in accordance with Federal Law No. 290-FZ “On International Companies”

   • application for obtaining IHC status
     
   • information on controlling persons
     
   • notice for regional authorized executive body at the place of registration about intention to acquire the IHC status, which was submitted at least 6 months prior to registration in the SAR
     

   When registering an international company within the period from March 1, 2022 to December 31, 2023, documents and information (excluding information about controlling persons of the international company) can be provided no later than 12 months from the day of registration.

4. As of the application date, no objection from regional authorized executive body at the previous place of registration of the company
   
5. As of the application date, the aggregate participation interest of the controlling persons is at least 75% of such interest as of 01.03.2022
   
6. Aggregate participation interest of the controlling persons as of 01.03.2022 is at least 75% of the authorized capital as of 01.03.2022
   

Conditions for not applying the participation interest criterion for controlling persons requesting the IHC status:

As of March 1, 2022, the company is a public company

or

Aggregate direct and (or) indirect participation interest of public companies is 100%

or

Controlling persons (at > 25% participation interest as of 01.03.2022) are on the sanctions lists as of 01.03.2022

Conditions for IHCs applying reduced income tax rates

IHC applies reduced corporate income tax rates if it meets the following conditions during the entire reporting corporate income tax period:

1. At least 1 controlling person is recognized as a tax resident and (or) is a citizen of the Russian Federation.
   
2. As of the 1st day of the tax period, the aggregate participation interest of IHC controlling persons is at least 75% of such interest as of 01.03.2022, at least 75% of the authorized capital as of 01.03.2022 (not applicable for ICs).
   
3. The share of income from passive activities exceeds 90% of the IHC income.
   
4. The share of spending on goods/services in the RF exceeds 70% of IHC expenditures.
   
5. The IHC is managed in the RF.
   
6. At least 15 of the IHC workplaces are located at the IHC location in the RF.
   
7. The IC (Russian entity) meets the conditions of its recognition as an international holding company in accordance with Art. 24.2 of the RF Tax Code.
   
8. Office space of at least 50 sqm located in the SAR (or in Vladivostok).
   
9. Capital investments of at least RUB 300 mln (including VAT) at the location of the International Holding Company within 3 years.

Should the IHC fail to meet at least one of the above conditions, the amount of tax not paid as a result of unlawfully applying reduced tax rates shall be payable to the budget including the payment of appropriate penalties.

Under Federal law No. 291-FZ “On special administrative regions in the territory of Kaliningrad Region and Primorsky Region”, dated 03.08.2018, participants in a Special Administrative Region may agree on a convenient mechanism for the resolution of disputes arising out of agreements with counterparties or with the management company (including agreements on the performance of business activities), and refer such disputes for resolution by an arbitration tribunal administered by a permanent arbitration body (Part 2, Articles 12 and 16).

In order to refer a dispute to an arbitration tribunal the parties must agree on the use of arbitration. That agreement may take the form of a clause in the contract between the parties (arbitration clause), or it may be concluded by means of an exchange of letters or procedural documents.

Advantage of the proposed mechanism over traditional dispute resolution through litigation in the state courts

Flexibility and predictability

The parties and the arbitrator can “adjust” the arbitration procedure to meet their needs, by selecting and agreeing on the deadlines for and manner of exchanging representations and documents, and the time and venue for the hearing. This freedom gives arbitration with another important advantage — the parties are able to appoint an independent expert with the appropriate qualifications to resolve their dispute.

Confidentiality

This option allows the parties to keep secret both the fact that they are involved in arbitration proceedings and the details of the proceedings. In some cases this can provide full protection for the party’s business and also save its relationship with the other party. It is very important to note that once issued an arbitral decision is binding and can currently be enforced in 172 countries.

 

In Vladivostok, you can submit disputes for arbitration to: