MOSCOW INVESTMENT DIGEST April 2020
The Moscow Department of Investment and Industrial Policy in cooperation with the Moscow City Investment Agency presents you the next digest of the main investment events in the capital.
Business Crisis Support Measures Approved
Moscow is supporting business in the context of the coronavirus infection spread: 3 packages of measures have already been taken to date. As a part of the first package, the deadline for paying the trade fee for the I quarter of 2020 is extended to December 31. For the same period, advance payments for the I quarter of 2020 on property tax and land tax for organizations engaged in the field of catering, tourism, culture, sports, leisure and hotel business were extended.
Companies that rent land from the city and suspend their activities for the period of restrictions are exempt from rent for this period. This applies to organizations engaged in the field of culture, sports, exhibition, entertainment, educational, educational and social-educational activities. Owners of non-stationary trading facilities in metro crossings will pay 50% less under contracts for trading activities.
The second package of measures expanded the access of small and medium enterprises (SMEs) to loans and subsidies. So, hotels and residents of the Moscow Innovation Cluster (MIC), working in the fields of industry, science and IT, can purchase up to 25% of expenses when purchasing imported equipment at their own expense, and for Russian-made equipment, the compensation rate was increased to 35%.
Franchisee support will be expanded through the inclusion in the program of entrepreneurs carrying out their activities under subconкромеcession agreements. The list of subsidized costs, in addition to the purchase of equipment, includes coverage of utility bills and remuneration to the right holder in the form of fixed one-time payments (lump-sum payments) and periodic payments (royalties).
Loans for working capital replenishment or investment purposes should be provided to entrepreneurs at a rate of no more than 8% per annum (about two times lower than the current market rate) in the amount of RUR 500,000 to 15 m.
As a part of the third package of support measures, small and medium-sized businesses, regardless of the type of activity, will receive subsidies from the city budget to pay interest rates up to 6% per annum on previously taken loans. For new stabilization loans taken to cover current activities, subsidies will cover the rate of up to 8% per annum.
Construction and development businesses will receive deferred payments for changing the purpose of providing land and similar payments to the city budget. About 3,300 entrepreneurs who rent real estate from the city and previously entered into agreements for its redemption will also receive a deferment: redemption payments for the II quarter will be postponed to the end of 2020.
Moscow Investment Portal Opened Business Assistance Section
‘In the new section of the Investment portal, we have collected information that may be useful to Moscow entrepreneurs in the existing realities. The main objective of the innovation is timely assistance to investors, answers to the most common questions, operational consultations. We tried to make it easier for businesses to find basic information about support measures, legislative acts, important contacts’, - said Alexander Prokhorov, Head of the Moscow Department of Investment and Industrial Policy.
The Moscow Investor section includes six main blocks where you can find phone numbers and the work schedule of the Economic Support Center, a “hot line” for representatives of small and medium-sized businesses, and a direct appeal line. In addition, the section contains the most frequently asked questions from entrepreneurs and answers to them - about the work of enterprises in the conditions of restrictions, about wages during non-working days, about registration and receipt of passes and others. In the Official Documents section, a regulatory framework has been published regarding the activities of companies in this difficult situation. Here are federal and regional laws that govern various aspects of the business.
‘On the new page of the Investment portal, measures for enterprises support from various sectors of the economy: trade, tourism, the hotel business, the production of innovative products, medical devices and medicines are provided. It also describes in detail measures to support owners of buildings and premises where retail facilities are located, organizations that provide preferential loans to SMEs, capital exporters, and franchisees’, - said Leonid Kostroma, CEO of the Moscow City Investment Agency.
Moscow Government Simplified Requirements for Leasing Subsidies
‘Previously, an enterprise participating in a subsidy program could enter into a leasing agreement only with an organization that has experience in providing leasing services for at least five years, as well as a leasing portfolio of at least RUR 1 bn. The amendments made to the Moscow Government’s decree cancel such requirements and allow expanding the number of potential partners, which means stimulating competition in this area’, – explained Vladimir Efimov, Deputy Mayor in Moscow Government for Economic Policy and Property and Land Relations.
Currently, industrial enterprises in Moscow have subsidy programs for the payment of interest on loans and leasing payments for certain types of equipment, for the reimbursement of part of the costs of technical connection and payment of interest on loans for the development of the property complex and industrial park.
Moscow Manufacturer of Medical Equipment Transferred Scarce Components to Kommunarka Hospital
One of the Technopolis Moscow special economic zone (SEZ) manufacturers, the Hirana Plus company, donated scarce expendable materials for medical equipment to the State Clinical Hospital in Kommunarka. 1,500 sets of 2 types of respiratory circuits (ready-made ventilation devices and the patient are connected) and 1,000 bacterial-virus filters were shipped to the medical facility.
The Hirana Plus company handed over expendable materials to medical equipment together with the Belarusian partner Assomedika. ‘The company has been operating at the Technopolis site since last July, and now its capacity allows it to produce up to 100 units of medical equipment per month. At the same time, the company is ready to increase production volumes, since working conditions in the special economic zone allow it’, - said Alexander Prokhorov, Head of the Moscow Department of Investment and Industrial Policy.
Technopolis Moscow SEZ Resident Launched Protective Outwear Production
The Orthomoda company, a textile industry plant and a Technopolis Moscow special economic zone resident, has switched to the production of personal protective outwear. At the moment, the company is fulfilling the first bulk order for 1,000 suits made of waterproof protective fabric, negotiations are underway with other interested customers, and the terms of reference are being determined.
‘As of today, 6 Moscow textile plants have switched their capacities to the production of protective outwear. The companies will supply about 4.5 m overalls and 1.5 m shoe covers to medical facilities’ - said Alexander Prokhorov, Head of the Moscow Department of Investment and Industrial Policy.
Developers Will Receive a Deferral in Rental Payments
Moscow has developed support tools for development companies: they will allow developers to get a deferral of rental payments by more than RUR 7 bn, and also free developers from penalties by another RUR 0.8 bn. ‘Investors renting land from the city for the construction of commercial facilities as part of the implementation of large-scale investment projects will be able to get a deferment in rental payments for the II quarter. At the same time, the appeal period is as convenient as possible: an application can be submitted before the end of the year’, – said Vladimir Efimov, Deputy Mayor in Moscow Government for Economic Policy and Property and Land Relations.
To build large-scale commercial facilities, entrepreneurs rent urban land for 6 years. The rate payable in the first year of the lease of the plot depends on the building density, in the third and subsequent years it rises from 3% to 8% of the cadastre, and there are also market rental rates. The delay will affect tenants of land plots with a total area of 58 hectares, on which community centers, industrial parks, multifunctional complexes, sports centers, educational and cultural facilities are now being built.
Total Tax relief for Moscow Companies Will Exceed RUR 170 Bn
Moscow will keep for the business the approved preferences being in place before the restrictions due to the COVID-19 outbreak. Their total volume will be RUR 106 bn. Along with the anti-crisis measures approved by Sergei Sobyanin, the Moscow business will get a support of RUR 170+ bn in 2020.
This year, metropolitan enterprises were granted privileges on property tax, profit, as well as transport and land taxes. Some categories of entrepreneurs pay taxes on a simplified and patent system of taxation at a reduced rate. Also, for the first time, individual entrepreneurs are still granted tax holidays for two years.
‘The Moscow government has adopted 3 packages of anti-crisis measures, under which the amount of financial support for the capital’s business, which suffered from restrictive measures introduced in connection with the coronavirus epidemic, will amount to more than RUR 70 bn. These measures will complement the existing system of benefits and preferences and will allow Moscow business to further reduce costs, which is especially important in such a difficult time for the economy’, – said Vladimir Efimov, Deputy Mayor in Moscow Government for Economic Policy and Property and Land Relations.
Auction Winner Rents Premises on Tsvetnoy Boulevard
Basement of 91 m2 in a four-story apartment building built in 1917 in the Bolshoi Karetny Lane can be rented at an open auction. Currently, a bid campaign is being held to bid on this property. A ten-year lease agreement will be concluded with the winner of the auction. The rental price at the start is RUR 13,300 per 1 m2.
‘The competitive price and convenient location in the center are of interest to investors and entrepreneurs. Since the beginning of this year, a total of more than 50 participants have claimed the rental of nine non-residential premises located in the Central Administrative District’, - said Ivan Shcherbakov, Head of the Moscow Department of Competition Policy.
The First Land Plots Tenders for the Construction of Non-Capital Sports Facilities Have Been Announced
Open city auctions have rights to erect sports facilities at 5 sites in old Moscow. Bidders will be able to build non-capital fitness centers without obtaining a building permit, which will reduce the terms of work by two to three times.
Building plots are located in the south, southeast and east of the capital. Their total area is more than 2 hectares. In addition to the right to place objects, the winners of the auction will have the opportunity to seamlessly connect non-capital buildings to the networks of heat, water, electricity and sewage. The initial auction price varies from RUR 7,600 to 28,700 per year. Contracts for the placement of non-capital objects will be concluded for 49 years. Bidding is scheduled for May 26, 2020.
Moscow Land Rental Auctions Postponed
Due to the situation related to the threat of the coronavirus spread, non-working days have been set in Moscow. The application deadline for the Moscow property sale and rent auctions is postponed for May 2020 in order to provide competitive and equal conditions for all bidders.
In order to comply with the rights of winners of past auctions, the start of the deadlines for concluding lease agreements will be postponed to the first working day after the end of the non-working day. You can get advice on the procedure for participation in land tenders by phone +7 (499) 652-60-25; by e-mail email@example.com.