Tax incentive Policy for Territories with Special Economic Status in the far East and the Arctic: Territorial Growth or Spatial Polarization?

The study’s relevance stems from it examines how tax mechanisms should be re-evaluated to support the growth of territories with special economic status (TSES) in the Far East and Arctic. This paper aims to thoroughly investigate the TSES system’s outcomes in the Far East. It will also evaluate the inherent risks involved in adopting a single preferential system and propose a strategy for tax incentives tailored to the macro- region’s growth, considering its unique institutional, demographic, and environmental factors. The author pointed out that unifying the preferential regime in the Far East and Arctic, while seemingly attractive, poses systemic risks such as equalizing initial conditions and increasing competition between regions. The research presented a comparative analysis of two strategies: “broad benefits for all” and “targeted benefits” (concentrated incentives). The research performed two computational experiments using a verified hybrid model in AnyLogic 7.0 simulation environment, comparing the effectiveness of various tax incentive strategies through 2050. Considering negative demographic trends and the current institutional landscape, the study’s results determined that specific incentives, like a 50% tax deduction on investment for TSES residents in public- private partnership programs who achieve set goals, are more successful. Instead of a one-size-fits-all approach to tax instruments, the study’s conclusion favored a context- specific design, connecting incentive provision to investment volume and vital regional socioeconomic development indicators.

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