US manufacturer could benefit from subsidies as it seeks to establish research centre

Boeing stands to benefit from a raft of Russian state subsidies in its bid to establish an as-yet unspecified research facility in Dubna, a special economic zone near Moscow.

Yury Zhadanov, chief of Russia’s Special Economic Zones (SEZ) agency, says the US aircraft manufacturer is interested in working “in a technical-commissioning zone in the Moscow region, where there are plans for a centre to build new-generation aircraft”.

The Russian 2006 federal budget has allotted the six new SEZs an initial Rb8 billion ($286 million) with Dubna, which is scheduled for launch by early 2008, earmarked to receive Rb2.5 billion.

To benefit from the substantial tax breaks and privileges available – which include a provision for research and development expenditure together with asset and land acquisition to be exempt from tax for the first five years – businesses have to be engaged in research with a view to bringing a finished product into industrial use.

In addition, foreign goods may be imported into the SEZ free of customs duties and VAT, with the sale of Russian goods imported into an SEZ zero-rated for VAT although still liable to excise duties.

Boeing is known to want to expand its business in Russia although it has criticised Russia’s high taxes on imports of foreign jets with customs duties and value-added taxes accounting for about 40% of the aircraft price.

Boeing also seeks to strengthen its position within Russia’s civil aviation market as Russian carrier Aeroflot prepares to choose between the US manufacturer and Airbus for new long-haul aircraft.

The research centre could also be planned to support the production of the Russian Regional Jet. Until now Boeing’s relationship with the Ilyushin and Sukhoi design bureaux has been purely advisory, although it has subtly broadened since collaboration started in 2001.

Boeing says it is “not appropriate” for it to comment Zhadanov’s statement “at this stage”.


Source: Flight International