Crimean Free Industrial Zone: how to benefit from it?

Talks about Crimea as almost a new offshore appeared just after the events that had put its territorial status under question mark. Yet only in December 2014 Russia clarified its plans regarding the new region.

In the very end of October 2014, Russia passed the law On Development of Crimean Federal District and Free Industrial Zone (FIZ) on the Territory of Crimean Republic and City of Federal Importance Sevastopol, which implies creation of FIZ on Crimea for 25 years.

Harbors in Crimea and Sevastopol will be deemed as free harbors with application of special procedures of custom and frontier control, as well as other kinds of control. A free custom zone will be established in harbors, too.

As of December 2014, any entrepreneurial activity, except for mining and development of Russian continental shelf deposits, is allowed in Crimea.

Participants of Crimean FIZ should be registered on the territory of Crimea or Sevastopol, i.e. registered with tax authorities and possess investment declaration in accordance with requirement of the new legislation. Declaration should include the following information:

- objective of the project
- types of activity
- technical and economic justification of the project with specification of number of jobs created and salaries
- total amount of capital invested, which should be not less than RUR 3m for SMEs and RUR 30m for remaining entities in first three years
- investment plan for first three years
- project implementation plan

Participants of the free-trade zone will operate in a special regime of economic activity, including special urban development regime, special tax regime as well as possibility of receiving subsidies to compensate the costs. The costs eligible for subsidizing include taxes and tariffs on import of raw materials required for implementation of investment projects.

Taxation will be organized in the following way: profit that is assigned to the federal budget will be exempt from tax during 10 years, while profit that is assigned to the local budget will be taxed at rate not exceeding 13,5%.