TOKYO, September 6. /TASS/. The Japanese government believes that the special tax regime Russia is going to introduce on the Kuril Islands runs counter to Tokyo's stance regarding these territories, Chief Cabinet Secretary Katsunobu Kato told a news conference on Monday.
"This runs counter to our country's stance regarding the four northern islands (a customary reference in Japan to Russia's South Kuril Islands — TASS), as well as the gist of discussions over joint economic activity that have been conducted up to this moment on the basis of summit agreements. We find such statements regrettable. On September 3, we notified the Russian side this regime runs counter to our stance. Also, we said that joint economic activity must be carried out without harm to our juridical position," he said.
At the same time, Kato said that Tokyo was still prepared to hold discussions over joint economic activity on the southern part of the Kuril islands with Moscow on the condition this would not run counter to Japan' legal position.
Earlier, Russian President Vladimir Putin said at a plenary meeting of the Eastern Economic Forum that an unprecedented package of benefits and incentives for businesses on the Kuril islands would be introduced, including exemption from the key taxes on profit and fixed assets, and the land and transport taxes for a period of ten years. This preferential treatment will apply to companies tangibly present in the region, those which build facilities and businesses and hire personnel. A low tax rate of 7.6% for them will be established for a period of ten years. The whole territory of the Kuril islands will enjoy the status of a free customs zone where the value added tax will not be charged.
Putin said that both domestic and foreign investors, including Japanese ones, would be able to enjoy tax, customs and administrative benefits on the Kurils.
Background
Moscow and Tokyo have for many decades conducted consultations with the aim of concluding a peace treaty based on the results of World War II. The dispute over the South Kuril Islands remains the stumbling block. After the end of World War II the whole archipelago was taken over by the Soviet Union. Japan disputes sovereignty over Iturup, Kunashir, Shikotan and a group of adjoining small uninhabited islands. The Russian Foreign Ministry has said more than once that Russia's sovereignty has a proper international legal basis to rely on and is beyond doubt.
After Putin's visit to Japan in December 2016 and his meetings with the then Japanese Prime Minister Shinzo Abe a joint statement was adopted saying that the beginning of consultations on joint economic activity on the southern part of the Kuril Islands might be an important step towards concluding a peace treaty. The two countries are currently holding consultations on joint economic activity on five tracks: aquaculture, greenhouse farming, tourism, wind energy and waste processing.