Amendments have been made to the conditions of tax stabilisation for residents of special economic zones

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Pepeliaev Group advises that, on 2 November 2023, the Federal LawFederal Law No. 522-FZ "On amending articles 5 and 105-26 of Part I of the Russian Tax Code” dated 2 November 2023 (“Law No. 522-FZ”).
 supplementing the Russian Tax Code (the “Tax Code”) and changing the content of the “stabilisation clause” for residents of special economic zones was signed by the Russian President and published.

The amendments will come into effect on 1 January 2024

1. Background

The initial wording of Law No. 116-FZ dated 22 July 2005 “On special economic zones in the Russian Federation” (the “SEZ Law”) provided that items of legislation on taxes and levies that worsen the position of taxpayers that are residents of special economic zones ("SEZs") do not apply during the term of the agreement on conducting business in such a zone (article 38 of Law No. 116-FZ).

Federal Law No. 448-FZ dated 4 August 2023 extensively amended the SEZ Law. Among other things it repeals, starting from 1 January 2024, article 38 of the Law, which provides guarantees to residents of SEZs ("SEZ residents") protecting them from unfavourable changes to Russian legislation on taxes and levies.

At the same time, the SEZ Law is supplemented with article 38.1(6) whereby the provisions of any items of tax legislation apply to a SEZ resident taking account of the specifics established in the Tax Code.

We note that, before the Federal Law was adopted, the Tax Code had not provided for any stabilisation guarantees for SEZ residents, which created considerable risks for SEZ residents, including active ones.

2. The content of the new “stabilisation clause”

Starting from 1 January 2024, in place of the former stabilisation guarantees SEZ residents will receive new ones that are similar to those provided to residents of advanced development territories and the Free Port of Vladivostok. To this end, Federal Law No. 522-FZ has amended article 5(4.2) of the Tax Code.

It is established that no provisions of tax legislation are applied to SEZ residents, specifically insofar as they:

  • increase and/or cancel reduced tax rates, tariffs of insurance contributions established for taxpayers that are residents of the SEZ in connection with the performance of agreements on conducting business (the “Agreement”);

  • cancel or change the conditions of granting tax benefits and other preferences (including a special procedure and terms for paying them and the procedure for paying taxes and duties).

Stabilisation guarantees extend to apply to items of tax legislation in terms of:

  • insurance contributions;

  • corporate profit tax;

  • corporate property tax;

  • tax on vehicles;

  • land tax.


We note that the new "grandfathering clause” directly limits the range of taxes and levies that may be stabilised for SEZ residents. The "stabilisation clause” that is in effect until 1 January 2024 provides guarantees of protection from any items of legislation on taxes and levies being applied to SEZ residents if such legislation worsens the position of these SEZ residents as taxpayers.

3. Conditions whereby the “stabilisation clause” applies

Starting from 1 January 2024, the "stabilisation clause” will apply with respect to SEZ residents only on condition that the relevant Agreement specifies links to provisions of tax legislation with regard to reduced tax rates, tariffs, insurance contributions or tax benefits and other preferences (including a special procedure of and timeframes for payment, as well as the procedure for calculating taxes and duties) established for taxpayers that are SEZ residents in connection with their performance of Agreements.


Please note that stabilisation guarantees used to be provided to residents automatically from the moment they acquired the relevant status. The former stabilisation guarantees cease to have effect after 1 January 2024 and in order to receive new guarantees the current residents will be required to enter into a supplemental agreement to the existing Agreement on conducting business. Such supplemental agreement will contain the relevant links to items of legislation granting certain benefits and preferences to SEZ residents. For new residents such guarantees will take effect on condition that similar provisions are included in the Agreement.

4. Consequences of the "stabilisation clause” being changed for the purposes of paying the tax on excess profit

Immediately after the adoption of Federal Law No. 448-FZ whereby, starting from 1 January 2024, stabilisation guarantees are excluded from the SEZ Law, the Ministry of Finance published Letter No. 03-03-05/75723 dated 11 August 2023 clarifying that SEZ residents will also be subject to the provisions of Federal Law No. 414-FZ dated 4 August 2023 “On the tax on excess profit”.

As the state authority has clarified, article 38 of the SEZ Law that provides for stabilisation guarantees for residents will be repealed starting from 1 January 2024. From the same date the federal law comes into force establishing tax on excess profit. In view of this and in absence of provisions regarding the stabilisation clause for SEZ residents in article 5 of the Tax Code, the provisions of the Law on the Tax on Excess Profit will also apply to residents of SEZ starting from 1 January 2024.

The text of the draft law that underlies Law No. 522-FZ, the law at hand, came into being after the Ministry of Finance had published the above letter.

However, the adoption of Law No. 522-FZ and the expansion, starting from 1 January 2024, of the list of subjects of stabilisation guarantees set forth in article 5(4.2) of the Tax Code owing to SEZ residents being included in it does not cancel the obligation to pay tax on excess profit.

Firstly, the new stabilisation clause does not protect taxpayers from the need to pay newly introduced taxes that include excess profit tax but rather guarantees the stability of existing tax rates and the conditions whereby benefits are granted.

Secondly, the stabilisation of tax rates will apply only if there are references in the Agreement on conducting business to the provisions of tax legislation regarding preferences with respect to a specific tax.


Therefore, the changes in the conditions of tax stabilisation will result in SEZ residents not only having the obligation to pay taxes under the new rates, if such rates are raised after 1 January 2024, but also in them being obliged to pay tax on excess profit on equal terms with other major taxpayers. It is known that this tax is charged retrospectively on the excess profit received in previous years. Therefore, the aggregate tax burden of SEZ residents may increase not only after the change in stabilisation guarantees, but also for periods preceding this.

What to think about and what to do

We recommend companies conducting or planning to conduct business as SEZ residents:
  • to study carefully the content of the new stabilisation guarantees and the conditions for applying them;
  • to take account of such guarantees when planning business;
  • to consider entering into a supplemental agreement to the existing Agreement on conducting business.
The issue of worsening the status of SEZ residents will probably require an assessment by the Russian Constitutional Court. It appears doubtful that the “new” stabilisation clause will apply to current residents, which undoubtedly may result in the reduction of the tax benefit the investor draws from investment projects already in progress.

Help from your adviser

The lawyers of Pepeliaev Group have extensive experience of advising clients on all matters relating to SEZs.

We are ready to assist you with all issues of new stabilisation guarantees, specifically, to help you draft, approve and enter into the supplemental agreement (Agreement), as well as to formulate individual provisions of such an agreement for the purposes of the stabilisation clause being applied with respect to various benefits and preferences.

Our Special Investment Regimes reference guide will keep you updated on all changes in legislation and practice in relation to special tax regimes. Check out our dedicated Telegram channel.

Translated by the Translation Department of Pepeliaev Group

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