Ways of Enhancing Performance under a Special Economic Regime: Special Administrative Regions

Abstract

Emergence and growing popularity of economic zones with special tax status was registered in the second half of XX century. As of today special economic regimes play a notable role in tax planning for a broad range of economic agents. For the states with an undeveloped economy and a low production potential special economic regimes and tax revenue collected on them or any other revenue is an important aspect of fiscal policy. The article is devoted to analysis of special economic regime in special economic regions (SAR) in Russia. Our research hypothesis is that the SAR legislation in force contains provisions that are not sufficiently effective for Russian economy. The article describes key principles of SAR operation including terms for registration with, and entrance to SAR, available tax benefits and preferences, hard currency regulations, administration, data confidentiality, etc. Besides describing the economic and political motivation in establishment of SAR the authors assess the feasibility of special administrative regions as an idea and determine the actual effect from activity of SAR residents on Russian economy. The research carries out a comparison of SAR with such Russian special regimes as TOSED, FPV, SEZ and leading global low-tax jurisdictions like Singapore, Switzerland and BVI. It also outlines the imperfections in the legislation on special regions and the authors’ position on the expediency of further improvement of SAR in the current situation as well as offers ways and methods of enhancing the attractiveness and effectiveness of special administrative regions. The research results can be of use in justification of changes and amendments to the normative legislative provisions in force

Keywords

• special administrative regions
• tax haven
• re-domiciliation
• sar
• offshore
• russian offshore
• de-offshorization