The decree, issued Wednesday by President Boris Yeltsin and effective immediately, is entitled "On additional measures of attracting foreign investment in the manufactured goods sector."
The document states that manufacturing joint ventures in Russia with at least $100 million in capital and a $10 million foreign stake a tax break on certain imported goods.
The nature of imported goods covered by the decree is not specified, but alcoholic and tobacco products are excluded from the reduction.
According to local executives, firms qualifying for the cuts could be few.
"There are not many companies here with $100 million dollars in capital," said Scott Antel, manager of the tax and legal division at the accountancy firm of Arthur Anderson.
"It's a nice benefit, but not realistic," he said. "Nobody could qualify for it."
Antel said exemptions already exist for companies that contribute to their charter capital or add to it during their first year of operation. "You could achieve the same thing by increasing your charter capital," he added.
Other Western businessmen called the decree "strange," and said it might benefit at best only a handful of Moscow-based firms.
According to Imdad Haque, president of Global USA, a retail-goods importer, the order will likely have "no implications whatsoever."
Haque agreed that few companies have pumped that kind of money into Russia, and in any case most importers find alternative ways of "minimizing costs."
The decree, which will be in effect for five years, also specifies that those companies meeting the capital requirement must use domestically produced raw materials and employ Russian workers.
The text says the lowering of tariffs is part of an agreement concluded between foreign investors and the Russian government, which takes into account "the needs of the domestic market and the necessity of enlarging Russia's export potential."
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