Law No. 9 of 2010 Regarding Investment Encouragement

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Law No. (9) of 1378 A.H. (2010 C.E.) Regarding Investment Encouragement

The General People's Congress,...

• In implementation of the resolutions of the Basic People's Congresses in their annual ordinary session for the year 1377 A.H.
• After reviewing the Declaration on the Establishment of the People's Authority.
• And the Great Green Charter on Human Rights in the Era of the Masses.
• And Law No. (20) of 1991 C.E. on Promoting Freedom.
• And Law No. (1) of 1375 A.H. on the System of Work of the People's Congresses and People's Committees.
• And the Commercial Law and its amendments.
• And Law No. (67) of 1973 C.E. on Customs and its amendments.
• And Law No. (11) of 1992 C.E. on Providing Certain Provisions Regarding Real Estate Ownership and its amendments.
• And Law No. (19) of 1992 C.E. on Production Tax.
• And Law No. (5) of 1426 C.E. on Encouraging the Investment of Foreign Capital and its amendments.
• And Law No. (13) of 1430 C.E. on Planning.
• And Law No. (3) of 1369 A.H. on Urban Planning.
• And Law No. (7) of 1372 A.H. on Tourism.
• And Law No. (12) of 1372 A.H. on Stamp Duty.
• And Law No. (1) of 1373 A.H. on Banks.
• And Law No. (6) of 1375 A.H. on Encouraging the Investment of National Capital.
• And Law No. (7) of 1378 A.H. on Income Tax.

The following Law has been drafted:

Article (1) Definitions In the application of the provisions of this Law, the following terms and expressions are intended to have the corresponding meanings unless the context indicates otherwise:

1. The State: The Great Socialist People's Libyan Arab Jamahiriya.
2. The Administrative Authority: The competent administrative authority responsible for implementing the provisions of this Law.

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3. The Secretary: The Sector Secretary to whom the Administrative Authority is subordinate.
4. The Executive Regulations: The regulations issued to implement the provisions of this Law.
5. Foreign Capital: The financial value, whether monetary, in-kind, or intangible, assessed in a foreign currency that enters the State, whether owned by Libyans or foreigners, for the purpose of carrying out an investment activity.
6. National Capital: The monetary, in-kind, or intangible value assessed in the local currency that contributes to forming the capital of an investment project for Libyan citizens or for legal entities wholly owned by Libyan natural or legal persons.
7. Investment Project: Any investment activity that meets the conditions stipulated in this Law, regardless of its legal form.
8. Privatization: The transfer of ownership of companies and production and service units wholly or partially owned by the State or public legal entities to the private sector.
9. Investor: Any natural or legal person, national or foreign, who invests in accordance with the provisions of this Law.

Article (2) Scope of Application This Law shall apply to national, foreign, or joint capital invested in the sectors targeted by this Law.

Article (3) Objectives of the Law This Law aims to encourage the investment of national and foreign capital to establish investment projects within the framework of the State's general policy and economic and social development objectives, ensuring in particular the achievement of the following objectives:

1. Qualifying and developing Libyan human resources, enhancing their efficiency, equipping them with advanced skills, and providing employment opportunities for them.
2. Working to transfer knowledge and technology and localize them in the Libyan economy.
3. Assisting in the establishment, development, or rehabilitation of service and production economic units to enable them to compete and enter global markets.
4. Achieving spatial development.
5. Increasing and diversifying income sources.
6. Rationalizing energy consumption.
7. Exploiting locally available raw materials.

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Article (4) Forms of Investment This Law regulates the investment of national and foreign capital contributing to the project's capital in one of the following forms:

1. Local currency, convertible foreign currencies, or their equivalents supplied through official banking channels.
2. Machinery, equipment, devices, installations, transportation means, spare parts, and raw materials required for the implementation of the investment project.
3. Intangible rights such as patents, licenses, trademarks, and trade names necessary to establish or operate the investment project.
4. The portion of the project's profits and returns earmarked for investment, whether within the same project or in another project. The Executive Regulations shall govern the valuation of tangible and intangible assets, and the reinvestment of profits.

Article (5) Executing Authority A specialized administrative authority shall be established to assume responsibility for implementing the provisions of this Law, and its facilitation and organization shall be issued by a decision of the General People's Committee, upon a proposal from the Secretary.

Article (6) Functions of the Executing Authority The Administrative Authority shall work to encourage the investment of national and foreign capital and promote investment projects through various means, and shall have in particular the following functions:

1. Studying and proposing plans organizing investment and privatization, including preparing comprehensive investment maps covering all investment sectors and available and permitted investment opportunities in accordance with the sectors mentioned in this Law.
2. Receiving investment applications, determining the extent to which they achieve the objectives of this Law and meet its conditions and controls, studying the economic feasibility of the investment project, and ensuring the continued availability of necessary conditions for national and foreign investments subject to this Law.
3. Collecting and disseminating information and contributing to preparing economic studies related to investment opportunities in projects that contribute to the State's economic development.

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4. Taking measures to attract national and foreign capital and promote investment opportunities through various means.
5. Providing a unified counter service to enable investors to obtain licenses.
6. Studying investment legislation and reviewing it periodically, and submitting development proposals to the Secretary.
7. Taking necessary measures to implement the general policy of expanding the ownership base and privatizing public companies and economic units.
8. Any other functions assigned to it by the General People's Committee.

Article (7) Conditions Required in Investment Projects The project must achieve all or some of the following:

1. Transfer and localize modern knowledge, technology, technical expertise, or intellectual property rights.
2. Support links and integration between existing economic activities and projects, or reduce production costs, or assist in providing materials and operational supplies for them.
3. Exploit or assist in exploiting local raw materials.
4. Assist in the development and rehabilitation of remote areas.
5. Produce goods for export or assist in increasing exports thereof, or result in the complete or partial elimination of importing goods.
6. Provide a service required by the national economy, or assist in improving, developing, or rehabilitating it.
7. Provide employment opportunities for Libyan labor amounting to no less than 30%, and work to train them and equip them with technical skills and expertise. The Executive Regulations shall determine the conditions and arrangements for employing national and foreign labor.

Article (8) Investment Sectors Investment shall be permitted in all production and service sectors. The Executive Regulations shall determine the production and service sectors not covered by this Law, or those restricted to Libyans only or to joint participation between Libyans and foreigners, along with the contribution percentage of each party, the legal form of the project, and the minimum capital, in accordance with the nature of the activity.

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Article (9) Investment Permit A permit to establish, develop, rehabilitate, manage, or operate the investment project shall be issued by a decision of the Secretary, upon a proposal from the Administrative Authority. This authority shall exclusively have the competence to issue all licenses and approvals necessary for the investment project, such that these licenses and permits replace any other licenses or permits stipulated under prevailing legislation. The Executive Regulations shall determine the conditions and controls for granting permits and licenses.

Article (10) Benefits and Exemptions The investment project subject to the provisions of this Law shall enjoy the following benefits:

1. Exemption of machinery, equipment, and devices necessary for implementing the project from all taxes, customs duties, supply fees, and other similar fees and taxes. The exemptions in this paragraph shall not include fees charged for services such as port, storage, and handling fees.
2. Exemption of installations, spare parts, transportation means, furniture, supplies, raw materials, and advertising and promotional materials related to the operation and management of the project from all fees and taxes, regardless of their type or source, for a period of five years.
3. Exemption of goods produced for export from production tax and from customs duties and taxes levied on exports.
4. Exemption of the investment project from income tax on its activity for a period of five years, calculated from the date of authorization to commence the activity.
5. Exemption of dividend returns and profits resulting from the distribution of the investment project's profits during the exemption period, as well as profits resulting from the merger, sale, division, or change of the project's legal form, from all due taxes and fees, all within the exemption period.
6. Exemption of profits resulting from the project's activity if they are reinvested.
7. Exemption of all documents, transactions, and events created, concluded, or used by the investment project from the stamp duty stipulated under prevailing legislation. The investor may carry forward losses incurred by the project during the exemption years to subsequent years.

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The Executive Regulations of this Law shall determine the conditions and controls necessary to implement this Article.

Article (11) Disposal of Machinery and Equipment It is not permissible to sell or dispose of imported machinery, equipment, furniture, transportation means, devices, spare parts, raw materials, and operational supplies intended for the project, except with the approval of the Administrative Authority and after paying all customs duties and taxes levied on their import.

Article (12) Investor Rights The investor shall have the right to:

1. Open accounts in the name of the project in local and foreign currencies at one of the banks operating in the State.
2. Borrow from local and foreign banks and financing institutions in accordance with prevailing legislation.
3. Re-export foreign capital to the investor in case of the expiration of the project's term, its liquidation, or its complete or partial sale.
4. Re-transfer foreign capital abroad in the same form it was received after the expiration of six months from the date of its arrival, if difficulties or circumstances beyond the investor's will prevent its investment.
5. Transfer the net annual distributed profits and returns generated by the foreign capital invested in the project.
6. Employ foreign labor when no national alternative is available.
7. Grant a renewable five-year residence permit for the duration of the project's existence, and issue a multiple-entry exit and re-entry visa.

Article (13) Foreign Employees Foreign employees brought from abroad shall have the right to transfer their salaries, wages, and any benefits granted to them within the framework of the investment project abroad. They shall also be exempt from customs duties regarding their personal belongings, all in accordance with what the Executive Regulations shall determine.

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Article (14) Investment Register Without prejudice to the regulations governing the commercial register, a special register called the (Investment Register) shall be established at the Administrative Authority. All investment projects shall be recorded therein, indicating their legal form, investment size, activity type, names of owners and shareholders, their nationalities, and the percentage of foreign presence. The Executive Regulations shall determine the controls and procedures for registration in the Investment Register.

Article (15) Additional Benefits and Exemptions By decision of the General People's Committee, upon a proposal from the Secretary, tax exemptions for a period not exceeding three years or other additional benefits may be granted to investment projects proven to:

1. Contribute to achieving food security.
2. Use equipment that ensures energy or water savings, or contributes to environmental protection.
3. Contribute to achieving spatial development. The Executive Regulations shall determine the controls and provisions governing the consideration of a project as meeting these criteria.

Article (16) Privatization of Economic Units Economic units targeted for privatization that achieve the objectives and conditions stipulated in this Law shall enjoy all benefits and exemptions therein in case of their development, rehabilitation, management, or operation, subject to a decision issued by the General People's Committee regarding them.

Article (17) Use of Real Estate As an exception to prevailing legislation regarding ownership, the investor shall have the right to use real estate necessary for establishing or operating the project, whether public or private, all in accordance with the conditions and arrangements determined by the Executive Regulations.

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Article (18) Disposal of the Project Ownership of the project may be transferred wholly or partially to another investor with the approval of the Administrative Authority. The new owner shall succeed the previous owner in the rights, obligations, and liabilities arising under this Law and other prevailing legislation. The Executive Regulations shall determine the conditions and arrangements for transferring ownership.

Article (19) Violations If the investor is found to have violated any provision of this Law, the Administrative Authority shall warn the violator to rectify the violation within a reasonable period specified in the warning. If the violator fails to do so, the Administrative Authority may deprive the project of some of the benefits and exemptions stipulated in this Law, revoke the licenses granted to it, or refer the matter to the competent judicial authorities to compel the investor to pay double the amount of the exemptions granted.

Article (20) Revocation of Licenses Approvals and licenses issued for the project may be revoked, or the project may be finally liquidated, in the following cases:

1. Failure to commence implementation of the project or to complete it within the specified time without justification.
2. Violation of the provisions stipulated in this Law. All of the above shall be in accordance with the controls, conditions, and procedures determined by the Executive Regulations of this Law.

Article (21) Appeal The investor may appeal in writing against any decision issued against them in violation of the provisions of this Law within thirty days from the date of notification by a letter accompanied by a receipt. The Executive Regulations shall determine the authority before which the appeal is filed, the appeal procedures, and the duration of adjudication.

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Article (22) Project Accounting Documents The project owner must maintain the legal books and final accounts necessary for the project according to prevailing legislation, and prepare the annual balance sheet and accounts. The final accounts shall be certified by a certified public accountant according to the conditions stipulated in the Commercial Activity Law and in accordance with professional standards.

Article (23) Project Guarantees The project shall not be nationalized, expropriated, compulsorily seized, confiscated, placed under guardianship, attached, frozen, or subjected to measures having the same effect, except by law or court order and in exchange for fair compensation. These measures must be taken in a non-discriminatory manner, and compensation shall be based on the fair market value of the project at the time the measure is taken. The conversion of the compensation value into convertible currencies shall be permitted within a period not exceeding one year from the date of the law or judgment, at the prevailing exchange rates at the time of conversion.

Article (24) Dispute Resolution Any dispute arising between the foreign investor and the State, whether due to the investor's action or as a result of measures taken by the State, shall be referred to the competent courts in the State, unless there is a bilateral agreement between the State and the investor's home country, or multilateral agreements to which the investor's home country is a party, containing provisions related to settlement or arbitration, or a special agreement between the investor and the State stipulating an arbitration clause.

Article (25) Fees for Services A decision shall be issued by the Secretary, upon a proposal from the Administrative Authority, determining the fees due from the investor in consideration for the provision of services.

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Article (26) Judicial Police Officers Employees of the Administrative Authority whose designation is specified by a decision of the competent Secretary shall have the status of judicial police officers to monitor the implementation of this Law's provisions, record and prove violations, and refer them to the competent authority. In this regard, they shall have the right to inspect investment projects and review related books and documents. Other supervisory and police authorities with related duties shall notify the Administrative Authority and coordinate with it before carrying out any inspection or supervision work on investment projects licensed under this Law.

Article (27) Excluded from the Scope of this Law The provisions of this Law shall not apply to national and foreign capital invested or to be invested in oil and gas projects.

Article (28) Application of Regulations Governing Economic Activity The provisions of regulations governing economic activity shall apply to those subject to this Law, in matters not specifically addressed therein.

Article (29) Executive Regulations The Executive Regulations of this Law shall be issued by a decision of the General People's Committee, upon a proposal from the Secretary.

Article (30) Repeal of Previous Laws Law No. (5) of 1426 C.E. on Encouraging the Investment of Foreign Capital and its amendments, and Law No. (6) of 1375 A.H. on the Investment of National Capital, and Article 10 of Law No. (7) of 1372 A.H. on Tourism, are hereby repealed. Any other provision conflicting with this Law is also repealed. The provisions of this Law shall apply to all investment projects, events, and transactions related thereto existing under the previous laws mentioned in this Article at the time of its issuance, without prejudice to benefits and exemptions granted prior to its issuance. The regulations and executive decisions issued under the aforementioned laws shall remain in effect to the extent they do not conflict with this Law, until the Executive Regulations of this Law are issued.

Article (31) Publication This Law shall be enforced from the date of its publication in the Legislation Codex.

General People's Congress

Issued in: Sirte Date: 13 / Safar / 1378 A.H. Corresponding to: 28 / February / 2010 C.E.