Kaliningrad’s automotive cluster says its zero payroll tax for new jobs created can act as a magnet for companies with large numbers of staff.
The Kaliningrad exclave – formerly East Prussia and ceded to Russia after the second world war – is sandwiched between Lithuania and Poland and is home to a significant number of auto companies.
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These include Kia, Hyundai and BMW assembly facilities, while the largest automotive manufacturer is contractor, Avtotor.
“We are the Westernmost region of Russia, which makes logistics very convenient,” said Head of Kaliningrad Office in Moscow, Denis Saliy at the recent Russian Automotive Forum, organised by Adam Smith Conferences. “If you use components manufactured in Europe, Kaliningrad is the gateway to the European Union and the Eurasian Economic Union [Armenia, Belarus, Kazakhstan, Kyrgyz Republic and Russia].
“Of course geography alone is not enough. As of 1 January, 2018, new jobs created will be exempt from payroll tax. Normally that tax is 30% – that may be attractive for companies with high head count.
“We have a lot of infrastructure so people can start very quickly. We can pay for connection costs for new companies and would be willing to provide plots of land without launching tender procedures.
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By GlobalData“We have a lot of pharmaceutical companies in the region and they wanted to be located [near] the border of Poland and customs offices. They can practically look out of the window and see the border. We also have ports which operate throughout the year [and] railways with two gauges. We can move goods from Europe to China – this is not completely trouble free but it did go quite successfully.”
Kaliningrad’s importance as a conduit – the region has always been something of a corridor to the East – plans to put in place three more train ferries to start operations next year and connecting with what Saliy refers to as “the mainland” – that is to say Russia.
The exclave will be firmly in the spotlight next month as Russia hosts the football World Cup, with Kaliningrad playing host to England versus Belgium among many other games.
