• 2015 June 11

    Free port legislation

    Following previous attempts to establish special economic zones in Russian ports that showed little success, two draft laws are being designed today under the presidential and governmental instructions:  On the Free Port of Vladivostok and On the Free Ports of Russia. One of them is to be applicable within a certain region, the other one is to regulate the functioning of free ports throughout the country.

    Vladivostok to expand and to see more freedom

    Russia has long had laws on special economic zones including port zones (SPZs). However, SPZs proposed for the Murmansk Region and the Khabarovsk Territory never saw much development. >>>>

    After the accession of Crimea to the Russian Federation the ports of the peninsula were given a free port status under the newly signed law on establishment of the special economic zone in Crimea. 

    During his annual Presidential Address to the Federal Assembly held in December 2014, Vladimir Putin proposed providing a free port status to Vladivostok with an attractive and easy customs regime in view of the state’s special attention to the Far East region. The Ministry for the Development of Russian FarEast has drafted a bill providing for the free port status to be applied not only to Vladivostok but also to other ports of the region in order to prevent unfair competition.

    The Free Port zone is to cover 12-13 municipalities enabled to apply the best practices of cargo/passenger flows regulation and control, free port customs procedures, visa-free regime for foreign tourists and businessmen.

    Generally speaking, it is a sort of a special economic zone similar to the priority development area when it comes to taxation. The difference between PDA and Free Port was covered earlier >>>> 

    Freedom frameworks

    Meanwhile, Far East is not the only region requiring a special legal status for their ports and adjacent territories. This status could be interesting in its own way for Kaliningrad, Murmansk, Ust-Luga. Therefore, Russian Deputy Prime Minister Arkady Dvorkovich entrusted the Ministry of Transport with drafting the Bill to determine the principles of free ports all over Russia.

    The document prepared by the Ministry is under public discussion today. It is a framework document as specific issues are to be regulated by RF Government and certain acts of legislation. 

    The Bill defines the ‘free port’ term, sets the rules for creation and functioning of free ports, regulates the issues of economic, production, investment and other activities within a ‘free port’, as well as customs procedures within a free customs zone and special tax treatment at such territories.

    This sort of framework approach will, in our opinion, let escape the trap of generalized requirements and allow for ‘fine-tuning’ of Free Port regime in line with specific features of each area.

    In this context, the draft laws of the Ministry of Transport and the Ministry for the Development of Russian Far East do not conflict or repeat each other as the latter deals only with the specific region. Such laws with detailed description of a specific Free Port can appear in different regions. The Bill on Free Ports just determines general principles and establishes legal framework for the basic concepts.

    However, it is important to ensure that the laws on SEZs, Free Ports, PDAs and Free Port of Vladivostok are not confused with each other. 

    VItaly Chernov