Special Economic Zone Act (2015)

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Law Number: 24/2014 Special Economic Zone Act Volume: 43 Number: 236 Date: 6 Zulhijjah 1435 - 1 September 2014 Monday

Volume: 43 Number: 236 Government Gazette of Maldives On Wednesday, the 42nd day of August, in the 42nd year, the "Bill on Special Economic Zones" was passed by the People's Majlis in its second session. Pursuant to Article 24 of the Constitution, the Bill was assented to by the President on Monday, 0 September 4102 (6 Zulhijjah 0235H) and became an Act, published in the Government Gazette of Maldives today.

Volume: 34 Number: 642 Government Gazette of Maldives

Law Number: 24/6103 Special Economic Zone Act

First Chapter Introduction

Definition and Name .1 (a) This is an Act to designate independent business zones in the Maldives under the name "Special Economic Zone", to establish procedures for their creation, operation, and investment within these zones, and to outline the incentives provided to developers and investors in these zones. (b) This Act shall be known as the "Special Economic Zone Act".

Purpose .6 The purpose of this Act is to achieve the following: (a) To facilitate the following objectives through the establishment of zones as part of efforts to increase and expand economic activity in the Maldives: (1) Facilitating the industrial, economic, social, financial, and infrastructural development of the Maldives; (2) Increasing investments in the Maldives and increasing foreign currency inflows through these investments; (3) Facilitating the transfer of knowledge, skills, and technology to the country; (4) Creating and expanding employment opportunities; and (5) Increasing and producing goods and services. (b) To establish procedures for the development of zones and investment within them, to define the protection of property for developers and investors in these zones, and to define the incentives provided to developers and investors in these zones. (c) To define different types of zones, to permit economic and financial activities conducted within each type, and to establish standards for facilitating and monitoring these activities. (d) To operate different types of zones in the country in accordance with the procedures outlined in this Act, to take necessary steps to ensure such operation, and to establish a Board to assume primary responsibility for monitoring to ensure that matters outlined in this Act proceed accordingly, and to delegate this responsibility.

Sequence .4 The sequence of main concepts included in this Act is provided in the Second Chapter. (b) Words and expressions used in this Act that have specific meanings are provided in the General Sequence outlined in Article 26.

English Language and Expressions .3 Certain English words and expressions are used in this Act as such because these words or expressions constitute technical meanings commonly used in relation to the concept of zones. This is done to align the establishment and administration of zones in the Maldives as closely as possible with international standards, thereby facilitating implementation.

Interpretation of Words and Expressions .5 (a) If a specific word or expression included in this Act is defined in the Sequence of Concepts in the Second Chapter, that word or expression shall be given the meaning provided in that Chapter. (b) If a specific word or expression included in this Act is defined in the General Sequence in Article 26, that word or expression shall be given the meaning provided in that Article. (c) If a word or expression used in this Act is not defined in the Sequence of Concepts in the Second Chapter or in the General Sequence in Article 26, but is defined in Law Number 3/6100 (Interpretation of Laws), that word or expression shall be given the meaning stated in that Law. (d) In any case where any article, purpose, use, or scope of this Act must be interpreted, this shall be done in accordance with the procedures outlined in Law Number 3/6100 (Interpretation of Laws), and with due regard to the purposes of this Act as outlined in Article 6.

Some Rules of Law Interpretation .2 (a) Unless otherwise specified in this Act or indicated by the context in which a word is used, the following general rules shall apply in interpreting matters stated in this Act: (1) A word used in the singular may be used in the plural, and a word used in the plural may be used in the singular. (2) If this Act refers to a person or entity, it includes both natural and legal persons. (3) If this Act refers to a Chapter, Article, part of an Article, letter, or Schedule, the reference is to that Chapter, Article, part of an Article, letter, or Schedule of this Act. (4) A reference to an Act includes any amendments to that Act and any regulations made under the authority of that Act. (5) A reference to an agreement includes the agreement as first signed and any amendments to that agreement as stated in the agreement. (6) Where a period is referred to starting from a specific date of notice or a specific event, the period shall be calculated excluding the date of the notice or the day the event occurred, starting from the following day. (7) Unless otherwise stated in clause (2) of this letter, any specific period mentioned in this Act or granted under this Act shall be calculated including official holidays. (8) If a day specified for an act to occur or for a period to expire falls on an official holiday, that day shall be considered as having passed or the period shall be considered as expiring on the next working day following that official holiday. (9) A reference to a specific date, day, or time shall be considered as having passed when that date, day, or time arrives in Malé, the capital of the Maldives. (b) The provisions in clause (a) of this Article shall also apply in interpreting regulations made under this Act, as appropriate.

Commencement of Law .7 (a) The first two Chapters and the General Sequence in Article 26 of this Act shall come into force from 06:00 on the day this Act is published in the Government Gazette of Maldives. (b) Unless otherwise stated in clause (a) of this Article, the remaining parts of this Act shall come into force on a date or dates announced by the President at the time of assenting to this Act. (c) Unless otherwise stated in clause (b) of this Article, no part of this Act shall be enforced after 40 December 6103 due to the date or dates specified in that clause. Furthermore, unless otherwise stated in clause (b) of this Article, all parts of this Act shall fully come into force from 06:00 on 40 December 6103.

Second Chapter Sequence of Concepts

Basis of Concepts .2 The words and expressions outlined from Article 9 to Article 09 of this Act constitute the main concepts upon which this Act is built. These concepts are outlined in those Articles to maintain the integrity of this Act and to facilitate achieving its broadest purpose. Every Article of this Act must be read or interpreted in a manner that does not contradict these concepts.

Special Economic Zone .9 "Special Economic Zone" or "Zone" refers to a specific geographic area that is delineated or identified, where specific economic activities are conducted, operated, or established under one developer and one management, to provide special incentives to entities engaged in these activities. Additionally, this area is managed as a separate customs area, isolated from the general jurisdiction of Maldives Customs under this Act, considering procedures related to import and export duties. It also includes the different types of Special Economic Zones defined from Article 01 to Article 07 of this Act, as appropriate.

Industrial Estate .10 "Industrial Estate" refers to an area where land is divided into various parts under one management within a designated zone, designed to serve various infrastructural and general service needs. It establishes main resources that can be used jointly by all entities investing in the zone, shared among them, and from which services are provided to them jointly.

Export Processing Zone .10 "Export Processing Zone" refers to an area organized to produce goods for export using materials produced in the country or imported into the country. It is organized to facilitate the production and export of goods using resources and services obtained from that area.

Free Trade Zone .10 "Free Trade Zone" refers to a specifically designated area for activities such as transshipping, storing, warehousing, repacking, or adding value to goods imported into the area for export purposes. It is established separately and connected to an airport or seaport.

Enterprise Zone .10 "Enterprise Zone" refers to an area created to highlight a specific region of the Maldives for development, aiming to produce a specific type of output or promote a specific type of business in that region. It targets businesses established and operated in that region by providing tax incentives, financial incentives, or other special incentives to activate and sustain the region.

Free Port .10 "Free Port" refers to an island or area specifically designated for establishing tourism resources and services, retail business resources and services, residential resources and services for people, and general utility resources, and to receive incentives and benefits allowed under this Act.

Single Factory Export Processing Zone .10 "Single Factory Export Processing Zone" refers to an industry or business highlighted for development in the Maldives, operated as an industry or business targeting the export of its products, providing incentives to entities operating that industry or business.

Offshore Financial Services .10 "Offshore Financial Services" refers to the following services or any of them, conducted in a zone under an Offshore Financial Services License, receiving incentives and benefits allowed under this Act, generally not providing direct services to residents: (a) Banking services permitted by the Maldives Monetary Authority; (b) Securities services permitted by the Capital Market Development Authority; (c) Insurance services permitted by the Maldives Monetary Authority; (d) Finance leasing services permitted by the Maldives Monetary Authority; (e) Collective investment scheme services permitted by the Capital Market Development Authority; and (f) Other financial services permitted by the Maldives Monetary Authority or the Capital Market Development Authority.

High Technology Park .10 "High Technology Park" refers to an area created specifically for research, education, and business that promotes and facilitates improving the quality of life and standards using modern technology and technological resources.

Developer .10 "Developer" refers to an entity that applies to establish a zone and is granted a permit to establish such a zone. It bears the general and primary responsibility for establishing and maintaining the material resources, services, and facilities required in the zone, and for controlling the entire management of the zone.

Investor .10 "Investor" refers to a specific investor permitted by the developer of the zone to operate in the zone under the main management of the zone and under an agreement with the developer of the zone. The investor establishes, operates, maintains, and controls a specific business in the zone, utilizes the benefits and facilities of the material resources established in the zone, and engages in business or economic activities in the zone.

Third Chapter Establishment of Zones

Types of Zones .11 In designating a zone or permitting a zone, the zone may be designated as one of the following types. Regardless of which type the zone is, it shall be considered a Special Economic Zone. (a) "Industrial Estate" defined in Article 01; (b) "Export Processing Zone" defined in Article 00; (c) "Free Trade Zone" defined in Article 06; (d) "Enterprise Zone" defined in Article 04; (e) "Free Port" defined in Article 03; (f) "Single Factory Export Processing Zone" defined in Article 05; (g) A service center for "Offshore Financial Services" defined in Article 02; (h) "High Technology Park" defined in Article 07.

Number of Zones .10 The Board shall determine how many zones of each type permitted by this Act shall be operated in the country.

Determining Investable Sectors .11 (a) The economic activities that can be conducted in a zone established in the Maldives, and the minimum total investment amount in such a zone, shall be determined and announced once a year by a Presidential Decree, upon consultation with the Board. (b) The decree mentioned in clause (a) of this Article shall be announced for the first time within 35 days of the establishment of the Board to be formed under this Act. (c) Each determination made under clause (a) of this Article shall be reviewed before February of each year and re-determined and announced by a Presidential Decree. (d) In permitting a developer by the Board, the economic activities that can be conducted in a zone, and the minimum investment amount that can be invested in such a zone, shall be considered as the economic activities and the minimum investment thresholds determined and announced in the decree by the President under clause (b) or clause (c) of this Article.

Incentives .14 (a) The incentives provided to zones established under this Act, or to developers or investors of zones, are outlined in Schedule 0 of this Act. (b) If an unfavorable change occurs to the incentives provided to zones, or to developers or investors of zones, under this Act due to the introduction of a new tax under another Act enacted after this Act comes into force, or due to a change in the rate of a tax already being collected, the President shall have the power to exempt the zone, or the developer or investor of the zone, from paying the subsequently introduced tax or the increased amount of the subsequently increased tax, in accordance with the regulations made by the Board, as agreed in the Investment Agreement signed with the developers of those zones. (c) If a developer of a zone appoints a third party through a contract to develop the infrastructural resources of the zone, and this is done under an agreement written between the developer of the zone and the third party, the incentives outlined in clauses (a) and (b) of Schedule 0 of this Act, which the developer of the zone is entitled to receive in return for performing the work, may be provided to the third party with the permission of the Board. For the purpose of providing incentives, the third party may be considered by the Board as an entity included in the meaning of developer. (d) Except for incentives included equally for everyone among the incentives outlined in Schedule 0 of this Act as incentives provided under this Act, if specific incentives or specific incentives among the incentives outlined in Schedule 0 of this Act are provided in connection with a specific matter, the circumstances under which these incentives are provided and the incentives that can be provided in those circumstances shall be stated in the regulations made and implemented by the Board under this Act.

Designation of Zone .13 Since a zone is designated as a separate customs area isolated from the general customs area of the country under this Act, and since it is an area that receives incentives in the implementation of certain laws, the geographic boundary of a zone shall be designated by longitude and latitude.

Characteristics Required in Zone .15 A zone must have the following characteristics or resources established: (a) It is a delineated or clearly identifiable area; (b) A feasibility study has been conducted; (c) An engineering study has been conducted; (d) An Environmental Impact Assessment has been conducted; (e) It is an area highlighted in the National Development Plan or government policy to bring activity, space, and productivity to the area contained in the zone and the surrounding area; (f) It is an area with the required infrastructure or infrastructural resources, roads, communication resources, seaports, airports, and other infrastructural resources that facilitate business activities, or where there is space to introduce such resources; (g) It is an area with the required land resources for the desired development and, if necessary, for further expanding that development; (h) It is an area where employment opportunities are available for trained individuals, partially trained individuals, and individuals with no training, or where such employment opportunities are created; (i) It is a zone where the activity creates direct benefits for the surrounding area, or it is an area that facilitates balancing population and development; or (j) It is a place that can be easily maintained or maintained separately.

Responsibilities of Developer .12 (a) In every zone, the developer of the zone must establish, operate, and maintain the zone's administration office. The developer is responsible for the zone and for the work of the zone's investors and the zone administration office. (b) Within the zones, the developer must establish the main infrastructural and material resources required to conduct the permitted type of economic activities in the zone, and determine the business procedures through which entities investing in the zone can access the use of these resources. (c) It is the responsibility of the developer to establish water, sewage, electricity, waste disposal systems, and waste treatment systems, and other related resources and services in an environmentally friendly manner in the zone. (d) It is the responsibility of the developer to arrange for customs services to be provided in the zone granted to the developer.

Characteristics of Developer .17 A developer submitting an application to establish a zone must have the following characteristics or capabilities: (a) The capability to develop the zone using the required material...