Free economic zone In Crimea. Benefits and risks.

A year and a half ago a free economic zone (FEZ) was created in the Crimea for a period of 25 years. Serious benefits were granted to it. FEZ companies-participants are exempt from customs duties, profit tax to the Federal budget, assets tax, land tax. Insurance contributions to the Pension Fund are 6% (in the rest of Russia – 22%), to the Social Insurance Fund - 1.5% (standard rate is 2.9%), to the Health Insurance Fund - 0.1% (standard rate is 5.1%).

During a year and a half this regime was used by more than 500 companies. Among them is LLC "Crimea Shoes" (owned by Zenden Group). According to RBC (informed by Zenden Group President) the total investment will amount to 1 billion rubles, the area of Footware factory in Yevpatoria will be 20,000 m2, the number of staff will amount to 500 people. In addition to the factory, a footwear testing laboratory and a corporate University will be built. Shoe manufacture started even before the construction is complete. Now about 5,000 pairs per month are manufactured.

Speaking about problems and risks, one can name the power outages (there`s a need to invest in the creation of reserve energy sources, which, in the case of disconnection, will produce more expensive electricity); high transport costs when working with the rest of Russia; economic sanctions by leading Western countries. However, in all three problems there is hope for improvement in the future, and businesses, assessing pros and cons, go to the Crimea after all. Where the risk is greater, there is usually more profit at a successful outcome.