Free Zones Act

Section Commencement Section This Act shall come into force on a date appointed by the Minister by statutory instrument.

Section Interpretation Section In this Act, unless the context otherwise requires— " Authority " means the Uganda Free Zones Authority established by section 6 ; " benefits " includes facilities and incentives provided under this Act; " Board " means the Uganda Free Zones Authority Board established by section 7 ; " business enterprise " means an operator licensed under section 38 . " capital " means cash contributions, plant, machinery, equipment, buildings, spare parts, and other business assets, other than goodwill, which are not consumed in the regular operation of a business; " CIF " means cost, insurance and freight; " client charter " means an implementable work schedule of personnel to meet client needs; " Commissioner General " means the Commissioner General of the Uganda Revenue Authority ; " currency point " means the value specified in Schedule 1 to this Act; " Customs officer " means an officer of the Commissioner General ; " customs territory " means an area under the control of the Commissioner General ; " Customs Union " means the East African Community Customs Union established under article 2 of the Protocol ; " developer " means a body corporate established to de...

Section Declaration of a free zone Section The Minister may, on the recommendation of the Authority , by statutory instrument, declare any building or area of land in Uganda to be a free zone . An instrument under subsection (1) shall state the name and boundary description of the free zone .

Section Factors to be considered in declaring a free zone Section In recommending an area to be declared a free zone , under section 3 , the Authority shall be satisfied that— in case of production for export , the percentage of goods and services exported from the zone is not more than the percentage stated in section 47 (1) (b) (iv); by performing the activities in the free zone , there will be an increase in employment; and the production and technological processes of the goods that are manufactured and stored, and the services that are performed, do not endanger the environment. A free port zone may only be established at a lake, river port, airport, border point or a place with similar geographic and economic advantage.

Section Spatial conditions for the establishment of a free zone Section A free zone shall be established in an area determined by spatial or physical plans for a locality. The construction of any infrastructure and the performance of other activities in a free zone shall be in the public interest.

Section Tenure and removal of members of the Board Section A member of the Board may be removed from office by the Minister if he or she— A member of the Board shall serve a term of three years, and may be reappointed for only one more term. A member of the Board may resign his or her office by writing to the Minister and the resignation shall take effect one month from the date of receipt of the letter of resignation by the Minister . Where a member of the Board dies or resigns or otherwise vacates office before the expiry of the term for which he or she was appointed, the Minister may appoint another person in his or her place. becomes of unsound mind or is incapable of performing the duties of his or her office; fails, omits or neglects to carry out his or her responsibilities as a Board member; has been adjudged or declared bankrupt under any law in force in Uganda and has not been discharged; or is convicted of an offence punishable by more than three months imprisonment or is convicted of an offence involving fraud or dishonesty; fails to attend, without lawful excuse, three consecutive meetings of the Board or is absent from four board meetings for a consecutive period of si...

Section Meetings of the Board Section The meetings of the Board shall be conducted in the manner prescribed in Schedule 2 to this Act.

Section Secretary to the Board Section The Executive Director shall be the secretary to the Board .

Section Functions of the Authority Section Without prejudice to the general effect of subsection (1), the Authority shall have the following functions under that subsection— Subject to this Act, the Authority shall be responsible for the establishment, management, maintenance, marketing, supervision and control of free zones. to oversee, co-ordinate and administer the provisions of this Act; to advise the Government on all matters relating to free zones and on its own initiative to make recommendations to the Government on policy, legal, financial and other issues that may affect the work of the Authority and the performance of free zones and to advise on best practices for implementation of free zones in Uganda; to recommend to the Minister the declaration, extension and termination of a free zone ; to identify and map areas to be declared as free zones; to act as a body having national responsibility for the drafting and implementation of policies and actions relating to free zones including the establishment, development, promotion, management, control, operation, supervision and monitoring of free zones; to provide, construct, develop, alter, adapt, maintain and administer free...

Section Power of Minister to give policy directions to the Board Section The Minister may, in writing, give directions to the Board on matters of a policy nature and the Board shall give effect to such directions.

Section Secretariat of Authority Section The Authority shall have a Secretariat, which shall be headed by the Executive Director and shall have such other officers and staff as the Board may determine. The Secretariat shall have such functions as may be assigned to it by the Board .

Section Executive Director Section The Minister shall, on recommendation of the Board , appoint the Executive Director of the Authority . The Executive Director shall be a person of high moral character and proven integrity with the relevant qualifications and experience to the functions of the Authority . The Executive Director shall hold office on such terms and conditions as may be specified in his or her instrument of appointment. The Executive Director shall be the Chief Executive Officer of the Authority and shall, subject to general directions as the Board may give, be responsible for the day-to-day administration of the Authority and the implementation of the decisions of the Board .

Section Officers and staff Section The Board shall appoint officers and staff as may be necessary for the proper and efficient discharge of the objects and functions of the Authority under this Act. The officers and staff appointed under subsection (1) shall be paid such remuneration and allowances as the Board may determine. The Board may delegate to a Committee of the Board or the Executive Director or any other officer of the Authority any of its powers under subsection (1), for the appointment of staff at such levels and subject to such condition as the Board may determine.

Section Liability of staff Section A member, officer or other staff of the Authority is not, in his or her personal capacity, liable in civil proceedings in respect of an act or omission done in good faith in the exercise of his or her functions under this Act.

Section Establishment of the Uganda Free Zones Authority Section The Authority shall be a body corporate with perpetual succession and a common seal, and may, in its own name— There is established an Authority , known as the Uganda Free Zones Authority . enter into any contract, acquiring, holding and disposing of property, movable and immovable, necessary for the achievement of its objectives and performance of its functions under this Act; sue and be sued; and do all acts and things that a body corporate may lawfully do or suffer.

Section Uganda Free Zones Authority Board Section The governing body of the Authority shall be the Uganda Free Zones Authority Board .

Section Functions of the Board Section The Board shall— be the policy making organ of the Authority ; give direction to the Executive Director in connection with the management, performance, operational policies and implementation of the policies of the Authority ; on the recommendation of the Executive Director , approve such organizational structures, terms and conditions of service of staff of the Authority ; prescribe such administrative measures as may be required to safe guard all revenue of the Authority ; establish such committees as are necessary for the proper discharge of its functions under this Act; and subject to section 16 , appoint, remove and suspend the members of staff of the Authority.

Section Composition of the Board Section The following shall be the members of the Board — a Chairperson, who shall be a person of high moral character with proven integrity and relevant experience; the Vice Chairperson, a representative of the Ministry responsible for finance; a representative of the Ministry responsible for trade, a representative of the Uganda Investment Authority ; a representative of the workers nominated by the Fedreration of Labour Unions in Uganda; a representative of the Uganda Land Commission; and a representative of the Uganda Revenue Authority , who shall be an ex officio member. The Minister shall appoint the Chairperson and other members of the Board The Chairperson and Vice Chairperson shall be appointed from the Private sector. At least one third of the membership of the Board shall be of either gender.

Section Finances of the Authority Section The funds of the Authority shall consist of— money appropriated by Parliament for that purpose; grants, and loans; fees and charges levied under sub-section (2) for the supply of goods and services to investors and other interested parties; and any other money and securities received by, or made available to the Authority for the purpose of performing its functions under this Act; The Authority may levy such fees and charges for the supply of goods and services by the Authority as may be determined by the Board . The Authority shall provide and administer grants and other financial facilities for the development of free zones as it may be authorized by the Government.

Section Bank accounts Section The Authority may open and maintain such bank accounts as may be necessary for the performance of its functions. All monies received on account of the Authority shall be deposited in a bank account maintained under this section.

Section Estimates Section The Secretariat shall prepare and submit to the Board for its approval, estimates of revenues and expenditure of the Authority on a date appointed by the Minister to enable the President to submit the national estimates of revenues and expenditure to Parliament under article 155 of the Constitution. The Secretariat may, when the need arises, at any time before the end of the financial year, prepare and submit to the Board for its approval supplementary estimates in respect of the financial year. Subject to any other direction of the Board , expenditure shall not be made out of the funds of the Authority unless that expenditure is part of the expenditure approved by the Board under the estimates for the financial year in which the expenditure is to be made or in supplementary estimates approved under this section.

Section Financial year Section The financial year of the Authority shall be the same as the financial year of the Government.

Section Accounts Section The Board shall cause to be kept, proper books of accounts and records of the transactions of the Authority . Subject to any directions given by the Minister , the Board shall cause to be prepared and submitted to the Minister in respect of each financial year, and not later than three months after the end of the financial year, a statement of accounts. The statement of accounts under subsection (1) shall include— a balance sheet, a profit and loss account and a source and application of funds statement; and any other information in respect of the financial affairs of the Authority as the Minister responsible for finance may, in writing require.

Section Audit Section The Auditor General shall, in each financial year, audit the accounts of the Authority . The Board shall ensure that within four months after the end of each financial year, a statement of accounts described in section 23 (2) and (3) is submitted to the Auditor General for auditing. The Auditor General shall have access to all books of accounts, vouchers and other records of the Authority and is entitled to any information and explanation required in relation to those records. The Auditor General shall deliver to the Board and to the Minister a copy of the audited accounts together with his or her report on the audit.

Section Activities in a free zone to be subject to customs supervision Section Activities in a free zone shall be subject to supervision by the Commissioner General as provided under this Part.

Section Inspection by Commissioner General and issue of certificates Section In order to determine whether the conditions for carrying out customs supervision in a free zone area are fulfilled, the Commissioner General shall appoint an officer to inspect the buildings and premises in the free zone , in the presence of the developer of the free zone within thirty days from the day of receipt of its application. The officer shall prepare a report containing the findings for fulfilment of the conditions for carrying out customs supervision within eight days from the inspection day and where the officer finds any shortcomings during the inspection, he or she shall determine and state in the report a rectification period for the rectification of those shortcomings. The Commissioner General shall issue a certificate for fulfilment of the conditions for performing of the customs supervision in the free zone or a decision denying the request. An appeal shall lie against the decision of the Commissioner General issued under sub-section (3) may be made to the Minister , under section 75 .

Section Contents of the certificate Section A certificate issued by the Commissioner General shall state— the name of the developer of a free zone ; the consent of the Commissioner General , by order in the Gazette ; activities to be conducted in the free zone ; responsibilities of the developer as regards the customs supervision in the free zone ; conditions that the developer has to provide for the Commissioner General ’s operation in the free zone ; and any other relevant matter as he or she considers appropriate.

Section Altering a certificate Section The decision of the Commissioner General shall be altered if the developer of the free zone — enlarges the approved free zone area; changes the free zone locality; or determines new activities to be conducted in the approved free zone . The decision of the Commissioner General shall be altered upon the request of the developer or when the Commissioner General establishes that the conditions for carrying out the customs supervision have been changed. The decision of the Commissioner General shall be altered in accordance with the procedures prescribed in section 81 and this section. The developer shall attach to the application for altering the decision, data on the activities conducted in the free zone . When the developer is joined by a new partner, or when a free zone is taken over by another developer , the developer shall inform the Commissioner General within fifteen days from the day of concluding the agreement for admission of the new co- developer or for the take-over by the new developer . The data on the new co- developer or developer under subsection (5) shall be attached to the statement, of information to the Commissioner General...

Section Customs supervision and control of a free zone Section The developer shall provide the necessary premises for the activities of the Commissioner General a free zone . The access, entry and exits in any part of the free zone shall be under customs control. Natural persons vehicles, vessels and aircrafts entering and leaving any part of a free zone described in subsection (2) shall be subject to customs inspection. Where it is necessary for conducting customs supervision, the Commissioner General may temporarily restrict or prohibit the conducting of any of the activities under of this Act. Subject to the powers of the Director of Public Prosecutions, the Commissioner General may file charges and prosecute in the appropriate court any person, if the Commissioner Generalr has reasonable grounds to suspect that criminal activities have been or are being carried committed by any person in the free zone . The Commissioner General may prohibit a user in a free zone from conducting activities in the free zone , if he or she fails to bring the activities into compliance with this Act. Where the Commissioner General has undertaken any measures under subsections (4), (5) and (6) or cr...

Section Declaring and placing at site of customs goods, e.t.c Section Notwithstanding subsection (2), goods , shall be placed at site by the Commissioner General and corresponding customs procedure shall be carried out where— Goods brought in any part of the free zone shall be declared to the Commissioner General . Goods brought into a free zone shall not be placed at site by the Commissioner General , nor shall a customs declaration form be filed, except for cases of those goods falling under section 46 . domestic goods intended for export , are brought into a free zone ; on bringing the goods into the free zone , any other customs procedure is completed, unless customs regulations governing those procedures provide that goods should not be placed at site by the Commissioner General ; or on bringing the goods into the free zone , the goods fulfill the conditions for rebate or exemption from paying import and export customs duties. Goods that are to be taken out of a free zone to the rest of Uganda shall be registered and placed at site by the Commissioner General , and approval for customs use of those goods shall be obtained in accordance with the customs laws. Notwithstanding su...

Section Inspection of goods Section The Commissioner General may inspect the goods that are taken out or kept in any part of the free zone as described in section 59 . In order to enable the inspection in subsection (1) an operator in a free zone shall submit to the Commissioner General a copy of the transportation document of the goods each time the goods are brought. Where the Commissioner General carries out an inspection under subsection (1), the operator in the free zone shall allow access to the goods and documentation for the goods that are subject to inspection to the Commissioner General .

Section Customed goods used as equipment in a free zone Section Plant, machinery and any other equipment introduced into a free zone shall be free of customs duty so long as they remain in the free zone . Only the equipment necessary for conducting approved production or service activities within the free zone shall be considered as equipment and only where the user in compliance with the accounting standards has entered the equipment in its accounting books as equipment. The equipment shall be taken out of the free zone only with the approval of the Commissioner General for the purposes of having customs duty to another part of Uganda, the enterprise shall report it to the Commissioner General for the purposes of paying the customs duty. Equipment taken out of the free zone to another part of Uganda shall be exempted from customs duty and value added tax, if it has been in continuous use in the free zone for a period not less than five years and one day. Passenger vehicles which are under any temporary import regime in the free zone shall be exempted from customs duty if taken out of the free zone to another part of Uganda after five years and one day of continuous use. Where equi...

Section Records Section For the purposes of customs supervision, the user shall keep records on goods — entering its industry in a free zone ; taken out from its industry in a free zone ; used in its industry in a free zone ; warehoused in its industry in a free zone ; or changed in its industry in a free zone . A business enterprise shall keep the records of the goods , listed in subsection (1), in a chronological order on the basis of the data contained in the documentation adjoining the entry and the departure of goods in and out of the free zone and on the basis of goods production standards. A business enterprise shall keep the records on goods described in subsection (1) for a period of five years. The Commissioner General shall prescribe the form, the content and the manner of keeping records referred to subsection (1). A person who contravenes this section commits an offence and is liable on conviction, to a fine not exceeding fifty currency points.

Section Developer of a free zone Section A free zone may be established by one or more domestic or foreign developers. Where several developers establish a free zone , they shall sign an agreement for establishing the free zone , which shall be filed with and be subject to the approval of the Authority . A developer shall be a company incorporated or registered in Uganda for the sole purpose of developing and operating a free zone . The developer shall demonstrate capacity and competence to develop and manage a free zone under criteria prescribed by the Minister by regulations.

Section Separation and arrangement of a free zone Section A developer shall clearly identify the free zone area it proposes to establish. The Authority in consultation with the relevant Ministries shall prescribe the specific criteria and the manner of arranging a free zone identified in subsection (1).

Section Free zone developer’s licence Section A person shall not carry on business as a developer of a free zone without a valid licence granted for that purpose under this Act.

Section Application for a developer’s licence Section The application shall contain the following information— An applicant for a developer ’s licence shall submit to the Authority a written application to establish a free zone . the name of the developer of the free zone ; the name of the free zone ; the location of the free zone ; the address of the main office of the applicant; the activities that are to be performed in the free zone ; the period for which the free zone will operate; the free zone construction terms with an excerpt of the spatial or urban planning documentation; the size of the free zone ; the authorisation and operational methods of the free zone ; the technological and other conditions for operating the free zone ; the manner of providing working conditions for the free zone customs office where necessary; the agreement referred to in section 25 (2) for the establishment of the free zone, where applicable; evidence that the conditions set out in section 4 have been complied with; the feasibility study or business plan; the marketing plan; the environmental impact assessment study on the area; and the project implementation plan for establishing the Free Zones...

Section Factors to be considered in granting a licence Section The Authority shall in considering an application for a free zone licence require that the applicant demonstrates capacity to develop and manage a free zone under criteria prescribed by the Minister by regulations.

Section Processing, grant or refusal of licence to develop a free zone Section The Authority shall, within three months after receipt of an application or of the additional information or clarification referred to in section 28 (3) investigate and prepare a detailed report in respect of each application. The Authority shall grant a licence for the establishment of a free zone if satisfied with the information contained in the application for the establishment of a free zone . In considering the approval, the Authority shall determine whether the conditions prescribed by this Act and other laws have been complied with and whether the application is in compliance with the development objectives of Uganda. Where the Authority refuses to grant a licence it shall state in writing the reasons for the refusal. A person aggrieved by a decision of the Authority under subsection (4) may appeal to the Minister as provided in section 75 within three months.

Section Commencement of activities in a free zone Section A free zone shall commence its activities not later than twelve months from the date of grant of a licence by the Authority . The Authority may upon application by a developer , extend the commencement period referred to in subsection (1) for just cause. Where a developer of a free zone fails to commence the activities within the commencement period or the extended period under this section, the licence shall cease to be valid.

Section Conditions for utilisation of a free zone Section The developer shall make rules prescribing— the conditions under which a free zone area may be used for conducting activities; the activities that may be performed in the free zone ; and the proper management of the free zone . The developer may by rules made under subsection (1) prescribe separate environmental standards in respect of each activity. The rules made by the developer shall not be inconsistent with the laws of Uganda or with international agreements ratified by Uganda. The developer of the free zone shall set out equal terms for conducting activities in a free zone for the business enterprises. The rules made by the developer shall be published in the Gazette after being approved by the Authority .

Section Duties of a developer Section A developer of a free zone shall provide the required start­up capital and any other necessary facilities for the development of the free zone . A developer shall provide assets for the establishment and commencement of activities in the free zone , as well as appropriate spatial, environmental, energy, technical and other conditions for conducting activities in the free zone and shall execute any agreement required for its establishment. The developer shall erect and maintain a strong perimeter wall or fence around the free zone to provide adequate security for the goods in the free zone and shall take all necessary measures to ensure their security. The premises and the means of access to a free zone shall be kept under constant supervision. A developer shall be responsible for making improvements to the free zone site and its facilities according to the plans approved by the Authority . A developer shall be responsible for providing or facilitating the provision of infrastructure and other services according to design and engineering studies submitted to the Authority together with the application.

Section Powers of a developer Section A developer may— act as or appoint an operator to undertake management and administration of the free zone on its behalf subject to any specific requirements under this Act; lease or sub-lease land or buildings to licensed business enterprises and charge rent or fees for other services that may be provided; make improvements to the free zone site and its facilities according to the plans approved by the Authority ; provide or facilitate provision of infrastructure and other services according to the design and engineering studies submitted to the Authority with the application; provide adequate enclosures to separate the free zone area from the customs territory for the protection of revenue; make suitable provision for the movement of persons, conveyances, vessels and goods entering or leaving the free zone ; provide adequate security on the site, office accommodation and facilities for customs as may be determined by the Authority ; adopt rules and regulations for businesses within the free zone , which shall promote its safe and efficient operation; and register any lease agreements and services .

Section Changes to a free zone Section For the purposes of this section "change" means— A developer may apply to the Authority to make changes to a free zone . Application for changes in a free zone shall follow the same procedure as for establishing a free zone . an enlargement of the approved free zone area; a change in the location of the free zone ; establishing new activities that are to be conducted in the free zone ; any change of the developer 's status such as the admission of a new developer , change in the capital ownership structure, take-over of the free zone by another developer and buy-out; and change of the duration for which the free zone is established.

Section Free zone activity report Section The annual report shall contain the following— external trade exchange performed, by volume, value and by country and also by— The developer of a free zone shall submit to the Authority an annual report on its activities in the preceding year not later than four months after the expiry of that year. financial, quantitative and value volumes of the free zone investments and production or services realised in the free zone ; product categories; country-product; types of activities; economic purpose; the processing level; sectors and sub-sectors as defined by the international trade classification; and number of employees over the period reported, by qualifications. The information in the annual report shall be listed in total and by individual users of the free zone .

Section Withdrawal of approval or closure of a free zone Section The Authority may at any time withdraw approval given to a developer and may cancel the licence for any of the following reasons— where bankruptcy or insolvency proceedings are commenced against the developer ; where a developer has submitted inaccurate data that is material in its application; where the developer fails to ensure commencement of activities in accordance with this Act; or where the developer fails to submit the report referred to in section 36 (1). A person aggrieved by the decision of the Authority under sub section (1) may appeal against the decision in accordance with section 75 . Where a free zone is closed, a licensee shall be given reasonable time to remove his or her goods to another free zone or to place them under a customs procedure, subject to compliance with the conditions and formalities applicable in each case.

Section Licence for operators Section Every application shall state— The Authority , after consulting with the Commissioner General , and such other bodies as may appear to the Authority to be appropriate, may grant to a business enterprise a licence authorising it to carry on the following— In deciding whether to grant or refuse to grant a licence under subsection (5), the Authority shall have regard to the extent to which— A person shall not carry on business as an operator in a free zone unless that person has been licensed by the Authority as a business enterprise . A business enterprise shall apply to the Authority for a free zone operator ’s licence before commencing its business in a free zone . An application to the Authority for a licence under this Part shall be made in the form prescribed by regulations made under section 82 . that the applicant is incorporated or registered as a company under the laws of Uganda for the purpose of producing goods or services within a free zone ; the type of licence for which the application is made; the free zone to which the application refers; the activities to which the applicant desires the licence to relate; and such additional info...

Section Activities of an operator in a free zone Section An operator shall conduct the activities in the free zone based on an agreement executed with the developer . The operator shall commence activities in the free zone after the Commissioner General issues a certificate confirming that all conditions for keeping records and security of customed goods have been complied with in accordance with this Act. The Commissioner General and other relevant authorities shall supervise the operator ’s activities.

Section Conditions of business enterprises in free zones Section The conditions attached to a licence under this Part may without limitation include condition relating to— The Authority may attach to a licence issued under this Part such conditions as it considers are proper and may, alter the conditions attached to a licence after consultation with the licensee. providing adequate enclosure, and in the case of an export industry, creating required customs facilities to ease customs administration together with suitable provisions for the movement of persons, conveyances, vessels and goods entering or leaving the industry; maintaining adequate, proper and other records in relation to its business and reporting on its activities, performance and development to the Authority on an annual basis; other conditions to ensure the orderly development of the free zone ; and a requirement that the licence granted to the operator shall be of a lesser period than that of a developer . Where a licensee fails to comply with a condition lawfully attached to a licence , under this Part he or she commits an offence and is liable upon conviction to a fine not exceeding twenty currency points.

Section Notice to Uganda Revenue Authority Section The Authority shall give notice to the Uganda Revenue Authority of every licensed business enterprise specifying— the activities in respect of which the enterprise is licensed, and shall, in relation to commercial activities, indicate whether the enterprise is permitted to deal in goods not directly related to its manufacturing activities; any conditions attached to the licence ; and a change in the particulars of an operator .