TAX BREAK FOR GENERAL MOTORS IN TATARSTAN.
Publication: Monitor Volume: 3 Issue: 6
The General Motors joint venture in the Russian republic of Tatarstan will be partially exempted from both a regional profit tax and from VAT, according to a resolution approved yesterday by the regional parliament. The tax breaks are to take effect once the president of the republic, Miniter Shaimiev, signs the 1997 budget law. The fiscal advantages granted to the car producing joint venture will cut the profit tax from 35 percent to 13 percent, and the VAT from 20 percent to 10 percent. GM and the Tatar ElAz company will be building Chevrolet Blazers, to be sold in Russia and other countries of the former Soviet Union. Initially, the Yelabuga-based factory will assemble components imported from Brazil, but ultimately those components are to be produced locally. (UPI, January 8)
The production of Blazers was launched last month in a ceremony attended by Russian prime minister Viktor Chernomyrdin, who enthusiastically drove one of the new vehicles. It is expected that annual production will be around 50,000 cars for the next several years, but GM could eventually increase that annual figure to 300,000 cars. GM officials see the Tatar joint venture as a way to increase sales by avoiding high import tariffs. It is expected that the vehicles will be sold for about $23,000, which is approximately one-third the price of many imported vehicles (AP, December 19) Moscow hopes that the joint venture will stimulate the interest of other foreign investors in the Russian economy. GM, which retains management rights in the company, will invest up to $250 million in the project. The governments of Russia and Tatarstan, for their part, will contribute 120 billion rubles to the joint venture this year (Interfax, January 8)
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