Business entities eligible to operate as Free Zone Developers or Free Zone Enterprises are companies registered under the Companies Act, 1963 (Act 179) or a partnership registered under the Incorporated Private Partnership Act, 1962 (Act 15). A free zone enterprise has the right to produce any type of goods (that are not environmentally hazardous) and services and for export.
Some of the benefits of free zones enterprises include:
- Tax Incentives: exemptions from the payment of income tax on profits for the first ten years of their operations, and a maximum income tax rate of 8% of the enterprises’ profits after ten years of operation.
- Export benefits: an enterprise located in a free zone area is required to export up to 70 % of the products produced in the free zone area.
- Investment guarantees, transfer of profits: (similar to those under the GIPC Act): unconditional transfer through authorised dealer banks in convertible currency of:
- dividends or net profits attributable to the investment;
- payments in respect of loans servicing where a foreign loan has been obtained;
- fees and charges in respect of a technology transfer agreement; and
- the remittance of net proceeds in the event of the sale or liquidation of the enterprise or an interest attributable to the investment.
- Dispute settlement procedures: In the event of failure to settle any dispute between a licensee in a free zone and the government in respect of an activity in the free zone through mutual discussions, the aggrieved has the option of submitting to arbitration:
- in accordance with the United Nations Commission of International Trade Law on arbitration; or
- in the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Government and the country of which the investor is a national are parties; or
- in accordance with any other national or international machinery for the settlement of investment dispute agreed to by the parties.
- in event of a disagreement between the investor and the Government as to the method of dispute settlement to be adopted, the choice of the investor shall prevail.
- Operation of foreign currency account: a free zone enterprise is permitted to operate a foreign currency account with banks in terms and conditions to be set out under the free zone license.