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Free Economic Zones

The Free Economic Zone (hereinafter- FEZ) is the limited territory having special legal status in relation to the remaining territory and preferential economic terms for local and foreign businessmen.

Regulation within the Customs Union

The FEZ are regulated by the Agreement on issues of free (special, specific) economic zones in the customs territory of the Customs Union and of customs procedure of free customs zones of June 18th, 2010 within the Customs Union.

The main task of this Agreement is the unification of the FEZ activity regulating legislations of the member-countries of the Customs Union, including Regulations on the use of free customs zone’s customs procedure.

The agreement provides the content of free customs zone procedure and commodities placement conditions under the customs free zone’s customs procedure.

The agreement specifies that the Customs Union Commission has a right to determine types of activity prohibited in the FEZ territory, as well as the list of goods, not to be placed under the free customs zone’s customs procedure.

At the same time, the order of FEZ establishment and operation, as well as use of preferential tax regime in the FEZ territory are related to the national legislation of the Customs Union member-countries.

According to this Agreement the free economic zone is the “part of the territory of the Customs Union member-country within the limits specified by the legislation of the Customs Union member-country, where special (specific, legal) order of business and any other activity operates, as well as free customs zone’s customs procedure maybe used”.

FEZ territory is the part of the Customs Union’s customs territory, where free customs zone’s (hereinafter- FCZ) customs procedure has effect. In other words the commodities are placed and used within the FEZ territory or its part without customs duties, taxes payment as well as without non-tariff regulation measures in relation to foreign commodities use and without use of bans and restrictions toward commodities of the Customs Union.

Apart from that, the commodities, produced in the FEZ with use of foreign goods and acknowledged as the Customs Union commodities in accordance with sufficient processing criteria are exempted from duties and taxes during export to the customs territory of the Customs Union. Sufficient processing criteria are set by the Customs Union Commission.

It is needed to note that within the framework of the Agreement the transition period on customs preferences for free economic zones was specified.

Thus, for the residents of the FEZ, registered by May 1st, 2010 the effective tariff preferences persist by January 1st, 2017.

The commodities, exported from FEZ territory to the remaining territory of the Customs Union, will be exempted from customs duties subject to sufficient processing criteria observation, specified by the Customs Union Commission for the FEZ residents which will be registered by January 1st, 2012.