The author, Marlyse Ndjenga, is a Camerooniam CEMAC certified tax expert and CEO FISCAL.COM GROUP (Cameroon, Congo, CAR)
The generic term “special economic zones” (SEZs) covers various forms of specially designated industrial and high value-added activity clusters. Unlike other economic operators, operators in these zones benefit from tax incentives. A SEZ can also be defined as a demarcated geographical area where economic laws are more liberal than in the rest of the country.
The third most common tool used to attract investment is investment protection measures, which account for 40% of SEZ policies. Investment protection measures can include protection against expropriation and unlawful seizure, such as Liberia’s Special Economic Zones Act of 2017 and Mali’s Investment Act of 2012; safeguards against nationalization, such as the Ghana Free Zones Act 1995 Mandatory Customs Protection, such as the 2017 Investment Act governing Egypt’s Special Economic Zones. -discrimination that treat foreign and domestic investors equally.
About a third of SEZ policies include some form of investment facilitation. Typically, ZES programs provide one-stop services to facilitate business access to public services. Countries like Ethiopia, Morocco, Rwanda and Senegal all have one-stop shops, but to varying degrees. Some countries have also simplified the pre-registration process, providing a list of documents and deadlines for approval of applications, such as the Rwanda Development Board, which clearly states the 17 steps required to obtain a license to use Special Economic Zone (Rwanda Development Board) Board of Directors, 2021).
Other investment facilitation measures include the establishment of business accelerators and incubators to provide technical assistance and ensure the availability of work facilities (as in Kenya) and the removal of employment restrictions for foreign employees in special areas (such as Djibouti and Nigeria). Many parks also allow 100% foreign ownership of companies, as well as more flexible profit repatriation rules (UNCTAD, 2019c).
In addition, about 23% of African SEZ governance policies focus on trade facilitation, aiming to reduce border wait times, remove red tape, and clarify rules and regulations. In Gabon, for example, the ZES regime offers the possibility of declaring any movement of goods entering and leaving the ZES zone or between companies via a single monthly form submitted by the one-stop shop (Gabon, Law No. 010/2011). Other SEZ systems, such as those in Egypt, offer the ability to process tax documents for import and export procedures fully online to reduce bureaucracy and administrative tasks (FATF, 2021a).
These regimes reserve preferential tax treatment for approved companies that make investments. In Cameroon, for example, the consecrated advantages are: exemption from registration and transfer duties; the 50% reduction in corporate tax (IS), IRPP and IRCM; the carryforward to the results of the following 05 years, of the deficit resulting from the allocation of depreciation normally accounted for during the first three (03) years; the reduction of a non-deferrable amount equal to 0.5% of the FOB value of manufactured products.
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