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Sochi Lawmakers Attempt to Save Failing Olympic Venues With Tax Break

Published: May 13, 2014 (Issue # 1809)



  • The tax break on Olympic venues means the regional government will lose 4 billion rubles.
    Photo: A. Makhonin / Vedomosti

Sochi's Olympic sports venues and hotels have been exempted from property tax for two years by the regional government, a move that analysts say simply reflects the hopelessness of their financial position after the Games.

According to the law, which came into force on May 6 and was published on the website of the Krasnodar region's Finance Ministry on Monday, all Olympic buildings will be freed from corporate property tax until Jan. 1, 2015. The term "Olympic buildings" is defined generously — sporting venues, the Olympic village, the Games' media center and the Russian International Olympic University in Sochi will all be exempt, as well as transportation and engineering infrastructure and hotels built as part of the government-driven construction.

According to a ministry spokesperson, by lifting the tax — set locally at 2.2 percent of the net value of a company's assets — the regional budget will miss out on some 4 billion rubles ($114 million), money it hopes to get back from the federal budget.

However, considering the indebtedness of many of the Olympic facilities in Sochi, analysts doubt the tax break is really voluntary. Most of them do not have the money to pay, said Ilya Volodko, CEO at consulting company MACON Realty in Krasnodar.

"Neither state-funded nor privately funded Olympic venues can generate income, so it would be impossible for them to pay the tax," he said. "They would be subsidized by the government in one way or another anyway."

The government sunk more than $50 billion into preparations for the Sochi Games, and encouraged billionaires like Oleg Deripaska and Vladimir Potanin to invest heavily in infrastructure. Construction was plagued by cost overruns, and private investors were granted huge loans by state-owned Vneshekonombank. Many of these have since been renegotiated, and the resort is struggling to attract enough tourists to fill its hotels in the aftermath of the Games, which were held in February.

Nikolai Kazansky, managing partner at real estate firm Colliers International, welcomed the tax break, saying it would "lower significantly the tax burden on investors." But the government should apply the exemption only to those venues with the longest return on investment periods, he added.





 


ALL ABOUT TOWN

Wednesday, Nov. 26


AmCham’s Public Relations Committee will meet this afternoon in their office in the New St. Isaac’s Office Center on Ulitsa Yakubovicha at 4 p.m.


Zoosphere, an international exhibition focusing on the pet industry, opens today at the Lenexpo convention center on Vasilievsky Island. Not only will items such as toys, terrariums and accessories be available for purchase, but animal enthusiasts can also learn about the latest in veterinary medicine and behavioral training thanks to the conferences and presentations that are part of the event.



Thursday, Nov. 27


The Customs and Transportation Committee for AmCham meets this morning at 9 a.m. in their office on Ulitsa Yakubovicha.


Tickets are still available for local KHL team SKA St. Petersburg’s showdown with Siberian club Metallurg Novokuznetsk tonight at 7:30 p.m. in the Ice Palace outside the Prospekt Bolshevikov metro station. Tickets can be purchased on the team’s website, at the arena box office or in their merchandise store on Nevsky Prospekt.


Celebrate one of Russian literature’s most tragic figures during Blok Days, a two-day celebration of the 134th anniversary of the poet’s birthday. The tragic tenor’s work, which led to writer Maxim Gorky to hail him as Russia’s greatest living poet before his death in 1921, will be recited and meetings and discussions about his contributions to the Silver Age of literature in St. Petersburg will be discussed in the confines of his former residence.



Friday, Nov. 28


Join table game aficionados at the British Book Center’s Board Game Evening. Held every Friday at 5 p.m., aficionados and amateurs alike can come take part in a variety of different games that test one’s intellect and cunning.



Saturday, Nov. 29


Cats, dogs, birds, rodents and reptiles are just some of the things that will walk and crawl at Lenexpo convention center this weekend as part of Zooshow, a two-day exhibition featuring not only man’s best friends but a four-legged fashion show, as well as a food fair that will help pet owners find out more about which kibbles are best for their hungry pets.



Sunday, Nov. 30


Remember the 75th anniversary of the beginning of the Russo-Finnish war in 1939 during today’s reenactment titled “Winter War: How it Was.” More than 200 people will take part in recreating the opening salvoes of the battle for the north in Kamenka, a small village situated between Vyborg and St. Petersburg, using authentic equipment and vintage vehicles from the era. The faux battle begins at 2 p.m.



Monday, Dec. 1


Serbia filmmaker Emir Kusturica is the featured guest this evening at the Lensovet Palace of Culture the Petrograd Side. Fans of the director will get the chance to watch his movie “Black Cat, White Cat,” as well as ask questions about his award-winning filmography. Tickets for the event, which starts at 7 p.m., start at 2,000 rubles ($42.50).



Tuesday, Dec. 2


Today is the final day of “Takoy Festival,” a three-week program of plays based on the works of Dostoevsky, Remarque and other famed European writers, whose work is transcribed for theatrical performances. Tonight’s festival finale is “Fathers and Sons,” a two-act drama staged by the Novosibirsk Academic Drama Theater based on Turgenev’s classic about familial relations.



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