The agreement provides for the Korean Land Development Corporation to develop all necessary infrastructure within initially a 20 hectare area and to sub-lease sites to investors. Tax incentives include a five-year holiday from federal profit tax from the first year of profit, exemption from taxes on retained earnings used for capital expenditure, and half the rate of value added tax payable on domestic sales until the date of first profit. K ey infrastructure services can be tailored to suit the particular needs of foreign investors. Before the Industrial Complex can commence operation, however, the federal Duma has to ratify the agreement and designate it as a free customs zone. It is, however, fairly easy to lease land.
Rents vary significantly.
It is wise to conduct careful due diligence research in order to avoid land ownership disputes. Administrative Committee, Nakhodka Free Economic Zone Dealing with Problems Customs clearance and certification issues present a major hurdle in the Russian Far East. Most foreign exporters develop relationships with long-term Russian importers who have experience in dealing with customs. Different tax authorities interpret legislation originating in Moscow in various ways. Investors should also be aware that project costs tend to be higher than expected in Russia.