Russian President Dmitry Medvedev has signed a federal law on measures to support the shipbuilding and shipping industry of Russia, the Kremlin press office said.
The new law is aimed at establishing in Russia the legal framework for the creation of economic incentives to foster Russian shipowners to place newbuilds orders at Russian shipyards and register their vessels under the Russian flag. The document amends the Code of Inland Water Transport (IWTC) and the Code of Merchant Shipping Code (CMS), Tax and Labor Codes of Russia, and four federal laws.
"I want to note that the support of our work by Russian President and Prime Minister was very helpful to us in promotion of this bill,” said one of the main drafters and ideologists of the law, Deputy Transport Minister Viktor Olersky.
“All that we wanted, everything that we thought necessary for the development of shipbuilding and shipping, is taken into account in this new law. It is now the turn of shipbuilders and shipowners.”
The law provides benefits for those shipowners, whose vessels are registered in the Russian International Register of Ships (RIRS). The owners of vessels that were built at Russian shipyards after January 1, 2010 and registered in RIRS, namely sea-going ships, river boats and mixed’ rive-sea’ class vessels will enjoy more benefits. The ships that would operate on short sea trade are subject to income tax exempt.
The law introduces restrictions on the initial registration of ships in the RIRS for vessels over 15 years, currently registered in foreign ship registers and for ships over 15 years, operating as coastal vessels only.
On the second reading the lawmakers secured in the law a clause on zero rate (up to 15 years) of insurance contributions made by the shipowner for crew members with further compensation for the contributions from the state budget of the Russian Federation (through Pension Fund, Social Insurance Fund, Federal Compulsory Medical Insurance Fund).
Besides, the law provides an opportunity for shipowner and crew members to conclude on mutual agreement fixed term employment contracts, as well as indefinite-term and cruise contracts.
A few benefits will be granted to the dockyards and shipbuilders that will get the status of the residents of special industrial and production economic zones. Before its second reading the law had more clearly defined the benefits, namely the exemption for a 10-year period from land tax and property tax (vs current 5-year term), granted to domestic shipbuilding companies.
According to drafters, the enactment of the law may reduce the payback period of a new vessel from the current 20 to 12 years. This will encourage the Russian shipowners to invest in fleet upgrade and book newbuilds orders with domestic shipyards.
The draft law prepared by the Ministry of Transport, the Ministry of Industry and Trade in conjunction with United Shipbuilding Corporation and representatives of major Russian shipping companies was introduced by the Russian Government before the State Duma on May 30, 2011. The bill was considered and given approval by the State Duma on its first and second reading on Jul 1, and Oct. 18, respectively.