US Businesses Attracted To Moscow’s Consumer Base Despite Sanctions

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  • American companies have invested US$2.7 billion in Moscow
  • Moscow has one of the world’s largest urban economies
  • A population of 12.5 million people with a per capita GDP of US$22,000
  • Significant FDI tax incentives available in SEZ’s

A Russian-United States Economic & Investment Round Table was held this week in Moscow, with representatives of the Moscow Government, Russian and American business taking part.

“Today Moscow is one of the largest urban economies in the world. Companies from the United States of America are among the most significant investors of our city. According to the latest data, the volume of accumulated foreign direct investment from this country is US$2.7 billion. At the same time, we are observing systemic dynamic growth, increasing by 34% over the year.”

said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.

“There are many examples of the localization of production of American companies in Moscow. For example, the Coca-Cola plant is localized in the city,” said Alexis Rodzianko, President and CEO of the American Chamber of Commerce in Russia. “The world’s leading pharmaceutical companies Abbot Laboratories, Johnson & Johnson, Lilly Pharma, Pfizer and IT leaders as Apple, Google, Intel, Microsoft have offices in Moscow. And there are a lot of other major international corporations with American roots that are successfully operating in Moscow.”

According to Alexis Rodzianko, the American Chamber of Commerce has long established and productive cooperation with the Moscow government in general, as well as municipal agencies for attracting investments, for supporting small and innovative entrepreneurship (startups), the Chamber of Commerce and Industry, and appreciates the activities that are being conducted in Moscow to create favorable conditions for doing business. To attract investments, including foreign ones, the Moscow authorities use various forms of public-private partnerships, develop innovative infrastructure, offer government purchases in exchange for investments (offset contracts) and tax, financial, organizational preferences.

For example, to support new investment projects in industry, the Moscow Government provides incentives for tax on profits, property, land, as well as for rent of land plots. This reduces the regional tax burden by up to 25%. Entrepreneurs can implement their investment projects, including in (technological clusters) technoparks and in SEZ’s such as Technopolis Moscow.

SEZ residents can receive benefits for a period of 10 years on income, property and land taxes. The overall reduction in the regional tax burden can reach 47%.

The urban population of Moscow is 12.5 million, making it Europe’s largest city, with an average per capita income of about US$22,000 – on a par with Barcelona or Liverpool.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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