Russian and international players given some time to prepare for new legal and economic environment
Although the Federal Law No. 333-FZ "On Introducing Amendments to FEDERAL LAW ON FISHERY AND CONSERVATION OF AQUATIC BIOLOGICAL RESOURCES and to separate legislative acts of the Russian Federation" was signed on 6th of December 2007, the market still has some time to prepare for this new legal and economic conditions for fish business, due to the fact that main innovations covering preferences for domestic suppliers to Russia, export of products via authorized fish auctions, high seas catch registration on the customs' territory of the Russian Federation and other measures will come into full force from 2009, as concluded by the analysts of http://www.fishnet-russia.com/ (https://www.fishnet.ru/) on studying the amendments of the Federal Law.
The letter and spirit of the document are explicitly aiming at full recovery of Russia's control of fishing operations while banning foreign participation in this field. This will be combined with incentives (such as soft credits) for renewal of domestic fleets, modernization of onshore factories and development of aquaculture. The material flows from the EEZ should be channeled for processing on Russian territory and in the latter two sectors (including shipbuilding) the foreign investors are expected to find new applications for their capitals.
Obviously, this time for breath the industry players will use to reconsider their marketing strategy and investment plans.
In particular, so far the above Federal Law No 333-FZ has only made a provision to include into the Tax Code of Russian Federation the preference in amount of 10% of the resource fee rate for business who will land catches in the Russian Federation. As quoted in the Federal Law, "the fees for each particular object of aquatic biological resources specified by clauses 4 and 5 of this article shall be set at 10 per cent of the resource fees stipulated by clauses 4 and 5 of this article for organizations and sole entrepreneurs selling and (or) processing captured (caught) aquatic biological resources delivered to the territory of the Russian Federation. Organizations and sole entrepreneurs carrying out fishery for the purposes defined by this clause, in order to confirm the entitlement to the resource fee in the rate defined by this clause, shall submit to their tax authorities the documents, the list and the submitting procedure of which shall be set by the Government of the Russian Federation".
At present, according to the Federal Law No.285-FZ dated 29 November 2007 "On Introducing Amendments to Chapter 251 of Part 2 of the Tax Code of the Russian Federation", the preference of paying 15% of the resource fees is already enjoyed by Russian fish organizations vital for local communities (community-forming organisations). The Law says that "the fees for each object of aquatic biological resources, ... for Russian fish organizations vital for local communities, included into the list approved by the Government of the Russian Federation, as well as for Russian fish organizations, including fishing artels (сo-ops) shall be set at 15% of the resource fees...".
The new preference may be of great importance for the companies' economies as the fees for liquid resources are fairly high. The list of resource fees is given in the table as below.
* The fee is levied subject to allowed fishery
1 January 2009
The Federal Law No. 333-FZ "On Introducing Amendments to FEDERAL LAW ON FISHERY AND CONSERVATION OF AQUATIC BIOLOGICAL RESOURCES and to separate legislative acts of the Russian Federation" stipulates that the article according to which all the biological resources harvested in the exclusive economic zone and on the continental shelf shall be subject to delivery to the customs territory of Russia for registration will come into force as of 1 January 2009. As for the other legislative acts, the deadline for their making is set for 1 July 2008.
More specifically, the law says that "until 1 July 2008 the Government of the Russian Federation shall:
- pass normative legislative acts stipulated by this Federal law as well as bring its normative legislative acts in conformity with it;
- provide for passing of normative legislative acts, stipulated by this Federal law, by the federal executive authorities, as well as bringing the normative legislative acts of the federal executive authorities to conformity with this Federal law;
- create conditions for sale of aquatic biological resources and processed products at commodity exchanges."
According to the law No.333-FZ, sale of aquatic biological resources and their products shall be carried out at commodity exchanges under the procedure stipulated by the Government of the Russian Federation. In March-April 2008 Russian fish exchanges will start working in trial mode. The press-service of the State Fisheries Committee told http://www.fishnet-russia.com/ (https://www.fishnet.ru/) that as of 1 January 2009 Russian fish exporters shall have to sell export products only via fish exchanges. By that time, according to the State Fisheries Committee, the supplementary by-law acts regulating this condition shall be approved.