Law on the Status of Approved Investment Project

L A W

on the Status of Approved Investment Project with Participation of Foreign Investor

This Law shall define legal and economic provisions and procedures for granting the status of approved investment project with participation of foreign investor on the basis of the Law of the Republic of Tatarstan "On Foreign Investments in the Republic of Tatarstan".

The Law aims to provide conditions for promoting active investment activity for development of the priority sectors of the economy of the Republic of Tatarstan.

Article I. Status of Approved Investment Project

An Investment Project shall be the set of documents containing organizational, legal and economic measures with feasibility study of their effectiveness, prepared in conformity with the standard form approved by the Cabinet of Ministers of the Republic of Tatarstan.

An Approved Investment Project shall be the project enjoying a special privileged status granted by the resolution of the Cabinet of Ministers of the Republic of Tatarstan.

Article 2. Categorization of Investment Projects

Investment projects shall be categorised as follows:

"K" category (large investment projects) - shall be granted to the projects which implementation shall produce an essential effect on the republican consumer market, employment and the republican budget of the Republic of Tatarstan, with investments exceeding the amount equal to USD 10 mln, provided that the portion of investor's foreign capital in the total amount shall comprise minimum 45% of its own and/or borrowed funds.

"C" category (medium-sized investment projects) - shall be granted to the projects of all-republican importance, with investments in the amount equal to USD 2 to 10 mln, provided that the portion of investor's foreign capital shall comprise minimum 35% of its own and/or borrowed resources.

"M" category (small investment projects) - shall be granted to the projects aimed at solution of regional and municipal problems, with investments in the amount equal to USD 0.1 to 2 mln, provided that the portion of investor's foreign capital shall comprise minimum 35% of its own and/or borrowed resources.

Article 3. Procedure for Approving Investment Projects

To be granted the status of approved investment project it is necessary to submit an application to the Ministry of Foreign Economic Relations of the Republic of Tatarstan.

The obligatory integral part of the application shall be a business plan in the form approved by the Cabinet of Ministers of the Republic of Tatarstan. Governmental expertise of an investment project shall be corned out by the interdepartmental Commission on Structural Investment Policy of the Republic of Tatarstan. "C" and "M" categories shall be considered in one month period, and "K" categories shall be considered in three month period starting from the date of receiving the proposals. In 10 days time upon completion of the governmental expertise the Cabinet of Ministers of the Republic of Tatarstan shall adopt a resolution. The applicants whose investment projects have been rejected shall be notified in writing by the Cabinet of Ministers of the Republic of Tatarstan in one week time.

Article 4. Procedure for Selecting Investment Projects

The Interdepartmental Commission on Structural Investment Policy of the Republic of Tatarstan shall carry out selection of the projects on a competition basis in accordance with the categorization envisaged in the Article 2 hereof. The terms and procedures of holding the competitions shall be approved by the Cabinet of Ministers of the Republic of Tatarstan.

Article 5. Types of Privileges Granted

By decision of the Cabinet of Ministers of the Republic of Tatarstan, the legal entities created with participation of foreign investors or fully owned by foreign investors shall be granted, in what refers to implementation of the approved investment project, with extra privileges, alongside with privileges granted according to the legislation currently in force, for the term of one year to five years, with further prolongation for the term of one year to five years in the amount of 50%, being as follows:

-exemption from the income tax related to sales of products/services in the part of income received from introduction of investment projects or allocated for introduction of these projects, payable into the republican budget of the Republic of Tatarstan;

-exemption from the value-added tax for products (works, services) produced as the result of introducing investment projects or allocated for introduction of these projects, in the part payable into the republican budget of the Republic of Tatarstan;

-exemption from excise tax in extractive industries;

-setting accelerated depreciation rates for equipment utilized as provided for in the approved investment project.

The procedures, specified use and terms of granting privileges for approved investment project shall be confirmed by the Cabinet of Ministers of the Republic of Tatarstan.

Local government authorities may grant privileges for payment of local taxes except for the cases provided for in contracts concluded by the Government of the Republic of Tatarstan, where privileges bear obligatory character.

Article 6. Termination of the Approved Investment Project Status

The approved investment project status shall be terminated due to following reasons:

a) expiration of the approved investment project status fixed by the resolution of the Cabinet of Ministers of the Republic of Tatarstan;

b) non-specified use of the privileges granted;

c) breach of conditions of the approved investment project.

The approved investment project status shall be terminated on the basis of the opinion of the Interdepartmental Commission on Structural Investment Policy of the Republic of Tatarstan and shall be executed by the resolution of the Cabinet of Ministers of the Republic of Tatarstan.

Should the decision be taken on termination of the approved Investment project status on the grounds mentioned in the paragraphs b) and c) of Article 6 hereof, the legal entity that received the privileges established by this Law shall be obliged to pay the total amount of privileges granted to it into the relevant budget.

Mintimer Shaimiev,
President of the Republic of Tatarstan
Kazan, March 6, 1996, No 466.