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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

Friday, Oct. 31


Put your grammar and logical thinking to the test in a fun and friendly environment during the British Book Centers Board Game Evening starting at 5 p.m. today. The event is free and all are welcome to attend.



Saturday, Nov. 1


The men and women who dedicate their lives to fitness get their chance to compete for the title of best body in Russia at todays Grand Prix Fitness House PRO, the nations premier bodybuilding competition. Not only will men and women be competing for thousands of dollars in prizes and a trip to represent their nation at Mr. Olympia but sporting goods and nutritional supplements will also be available for sale. Learn more about the culture of the Indian subcontinent during Diwali, the annual festival of lights that will be celebrated in St. Petersburg this weekend at the Culture Palace on Tambovskaya Ul. For 100 rubles ($2.40), festival-goers listen to Indian music, try on traditional Indian outfits and sample dishes highlighting the culinary diversity of the billion-plus people in the South Asian superpower.



Sunday, Nov. 2


Check out the latest video and interactive games at the Gaming Festival at the Mayakovsky Library ending today. Meet with the developers of the popular and learn more about their work, or learn how to play one of their creations with the opportunity to ask the creators themselves about the exact rules.



Monday, Nov. 3


Non-athletes can get feed their need for competition without breaking a sweat at the Rock-Paper-Scissors tournament this evening at the Cube Bar at Lomonosova 1. Referees will judge the validity of each matchup award points to winners while the citys elite fight for the chance to be called the best of the best. Those hoping to play must arrange a team beforehand and pay 200 rubles ($4.80) to enter.



Tuesday, Nov. 4


Attend the premiere of Canadian director Xavier Dolans latest film Mommy at the Avrora theater this evening. The fifth picture from the 25-year-old, it is the story of an unruly teenager but the most alluring (or unappealing) aspect is the way the film was shot: in a 1:1 format that is more reminiscent of Instagram videos than cinematic art. Tickets cost 400 rubles ($9.60) and snacks and drinks will be available.



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