Another way to obtain preferences is to establish legal entity and operate on a territory of small towns, population of which does not exceed 50 000 people. The list of preferences is established by a Presidential Decree #1 dated 28 January 2008.

The main benefits provided by the Decree are the following:

·     exemption from profit tax for a period of 5 years;

·     exemption from obligatory sale of foreign currency received from sale of goods, performance of work and services of own production;

·     exemption from import duties and VAT (except for VAT on goods imported from Russia) on manufacturing equipment and spare parts, imported for the purpose of contribution to the share capital of commercial organizations with foreign investments.

However, the benefits do not apply to such activities as gambling, banking, state defense, activity connected with weapons, alcohol and tobacco, mass media and publishing and some other.