Investment potentials

• Investment Projects and Proposals 2001

One of the main goals the Government of the Republic of Karelia faces is creation of developed market economy, attractive for domestic and foreign investors, of positive environment for business, reliable guarantees and minimal risks for investment.

Huge resource potential (more than 50 species of fossils, more than 800 cubic meters of forest resources, highly qualified human resources), powerful resource base, unlimited natural resources for traveling tourism, favorable geographic location of the Republic of Karelia ( more than 700 km of land frontier with Finland - member of European Union) speak for itselves. We do have objects and trends for efficient investment in the republic.

To minimize risks and ensure investment safety, the legislative base has been created and functioned since 1999. It envisions:

• Concessional taxation for investors while accomplishing investment projects in the Republic of Karelia, in particular:
  а) 100% tax exemption of profit tax for an investor-enterprise, included in the republican budget ( 19% from tax base), in spite of organization and law forms and property forms for recoupment period of investment, but not more than 5 years.
  b) 100% tax exemption of property tax, included in the republican budget (1% from tax base), created while accomplishing a project for recoupment period of investment, but not more than 5 years.
  c) 100% tax exemption of property tax, included in the republican budget (1% from tax base), created while accomplishing an investment project for additional period equal to actual recoupment period of investment, but not more than 2 years.
• Granting investment taxation of credit for the period up to 5 years.
• Provision of administrative assistance, support and promotion of the power bodies of the republic in solving the issues of project accomplishments with investment volume more than $1 000 000.
• Granting governmental warranties, guaranteed by the budget means of the Republic of Karelia to an investor, who attracts loan means to accomplish investment projects in the Republic of Karelia.
• Granting budget credits (participation in funding) to investors, accomplishing investment projects in the Republic of Karelia.
• Granting concession tax rate on profit tax, included in the republican budget (14%), to the credit organizations when granting investment credits.
• Guarantees not to worsen the starting terms of investment for the actual recoupment period even if new laws and regulations, declining efficiency and safety of investment would be adopted in the republic.

Since 1995 to 1998 the total volume of investment into economy of the republic has been permanently decreasing. And only in 1999 this negative tendency was changed. In 1999 investment volume increase made up 153,2% in comparison to 1998. In 2000 investment increase was supposed to make up 142,4% comparing with 1999 (see chart).

The same positive tendency keeps going for foreign investment. In 1999 investment volumes were more than three times higher comparing with 1998. These factors prove that investment policy held by the Government of the Republic of Karelia and aimed at creation favorable and safety terms for investors, enjoys the confidence of the latter and taken measures bring positive results.

*Expected during a year