1 Right place Right people for Your Business

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Right place, Right people for Your Business 2

Profile of the Rezekne and Rezekne region • Rezekne is the seventh largest city in Latvia (29 948 inhabitants in 2015), Rezekne region is the largest in Latvia (29 772 inhabitants in 2015) • The main industrial sectors – woodworking, metalworking, food processing industry, construction • The average net monthly wage in Rezekne in 2014 was 578 EUR, in Riga - 953 EUR, in Liepaja - 738 EUR, Ventspils - 885 EUR • Population of working age is 65, 24 % 3

Rezekne Special Economic Zone • Total area of Rezekne SEZ: 1155 ha • Founded in 1997 • Legal form: Joint municipal institution of Rezekne city and Rezekne Region Municipality councils • Term of operation: till 2035 • Information about Rezekne SEZ investment objects for business development is available at: http: //map. rezekne. lv/index_e n. php 4

Granting RSEZ status The Terms for Granting a RSEZ Company Status: Administrative Services Offered by RSEZ: • • Legal address of the company should be registered in the territory of • RSEZ • Business activities should be • conducted in the territory of RSEZ • Company should own or rent real estate in the territory of RSEZ Consultation on company registration in Latvia Consultation on granting the RSEZ status Consultation on available EU Structural Funds and other financial sources 5

Advantages of RSEZ • Direct access to the international market with more than 500 million of EU consumers • Tax relief • Skilled labour force • International importance transport and logistics centre • Support from government and municipalities • Stable cooperation traditions with European countries, Russia, the Commonwealth of Independent States (CIS) 6

Tax relief • A significant return on investment through a very favourable tax environment • The applicable corporate income tax (in Latvia 15 %, in RSEZ 3%) • 80% discount on the applicable property tax (in Latvia – 1, 5% of the cadastral value, in RSEZ it is 0% – 0, 3%) • Creating a free customs zone in the SEZ: exemption from VAT, excise and customs duties on imports in the SEZ from abroad and exported to foreign countries 7

RSEZ tax relief exampe Investments = 10 million EUR Profit = 1 million EUR Real estate cadastral value = 0. 5 million EUR Taxation in Latvia: Profit tax 15 % Taxation in RSEZ: 150, 000 EUR Profit tax 3 % 30, 000 EUR 0. 3 % 1, 500 EUR Real estate tax Total 1. 5 % 7, 500 EUR Real estate tax 157, 500 EUR Total 31, 500 EUR Savings per year: 157, 500 – 31, 500 = 126 000 EUR Intensity of support – 35 %- 55% depending on the size of the entreprise Tax relief calculator is available on the RSEZ home page: http: //www. rsez. lv/index. php/en/tax-relief-calculator 8

Import of goods through RSEZ EU RSEZ • It is possible to release goods for free circulation in the European Union by paying only customs duty (VAT is paid by the final recipient in any of the EU countries) China • Customs procedures are not applicable to transportation of goods from the point of import (Latvia) to the final recipient 9

Value added activities Save up to 5% if the goods are processed in the RSEZ “Price X” LATVIA EU Assembling, labelling and other value added activities 3%-5% ~ 5% less than the “price X” RSEZ Customs duty 15% The EU border Customs duty 5% The example shows how the importer saves 5 -7% from the total costs of the product, by establishing a company in the territory of RSEZ 10

Transit through RSEZ submission Purchase and sales operations in a free zone of RSEZ with no VAT applicable completion RSEZ CHINA RUSSIA 11

Professional human resources Educational institutions in Rezekne: Academy of Technology and the five branches of higher educational institutions of Latvia, Rezekne State Border Guard College, Rezekne Technical Collage and other Rezekne Techncal College implements 18 curricula (energy economics and electrical engineering, road transport, wooden articles manufacturing, construction, business studies, food technology, programming, computer systems, hotel industry and catering, et al. ) serving 800 students 12

Rezekne Academy of Technology Health and welfare 12% Engineering, manufacturing and construction 32% Humanities and art 28% Social sciencies, business and law 28% Rezekne Academy of Technology students according to the field of studies Rezekne Academy of Technology implements 39 curricula (21 for bachelor’s degree, 15 for master’s degree and 3 for doctoral degree) for involving over 1 800 full-time and part-time students Approximately 35% of all students study in Faculty of Engineering, where the most popular study programs are environmental engineering, mechatronics and IT 13

Labor costs and expenses Labor costs are among the most competitive in Latvia 713. 3 896. 2 Average 682 632 410 482 478 425 632 544 Wholesale/ retail trade 768. 01 774. 7 997. 01 1220. 77 ils 768. 01 974. 34 Manufacturing 652. 01 825. 7 sp Transportation Ve nt ie r a e Va lm R ēz ek n āj a Li ep ls Jē ka b pi av Je lg ils vp D au ga R a ICT ig a 800 700 600 500 400 300 200 100 0 Competitive operating expenses Sense of responsibility, diligence and efficiency at work – the inherent features of Rēzekne labour force 0 Gross wages 1000 2000 Labour costs 14

International importance transport and logistics centre Excellent logistics and transportation connections to the EU, Russia and CIS: • Modern embarkation park at the railway station “Rezekne- 2” • Crossroads of Trans-European Network (TEN) motorways and railways The nearest major international airports: Riga, Vilnius Major ports: Freeport of Riga, Freeport of Ventspils (422 km), Freeport of Liepaja (448 km), Freeport of Klaipėda (495 km) Riga 242 km Moscow 685 km St. Petersburg 457 km Warsaw 860 km 15

Facts about the RSEZ enterprises • The main sectors: metal working, wood processing, food processing, warehouse transactions • Totally RSEZ companies in 2014 employed 772 workers. • The number of companies: 18 • The overall turnover: 65 million euro, • SEZ accounted for 80% of all direct foreign investment in the city of Rezekne 16

Thank You for Attention! Joint Municipal Institution “Rezekne Special Economic Zone Authority” Atbrivosanas aleja 93, Rezekne, LV-4601 Phone/fax: +371 646 259 41 E-mail: info@rsez. lv www. rsez. lv 17