Export Processing Zones and Special Economic Zones

Export Processing Zones Authority(EPZA) An autonomous Government agency governed by a Board of Directors, operating under the Ministry of Industry, Trade and Investment. EPZA is responsible for steering and implementing government policy on promotion of Special Economic Zones (SEZs) in Tanzania. There are two distinct investment schemes, Special Economic Zones (SEZ) and Export Processing Zones (EPZ), available for both local and foreign investors and providing for a wide range of investment operations within the zones or within the stand alone industrial parks. EPZA is mandated by law to issue licenses which are synonymous with the business licenses issued by the Local Government Authorities (LGA). As a result, the investor would not require any other license except for highly regulated industries like food and drugs.

Investment The Export Processing Zone Authority (EPZA) grants incentives to businesses located in EPZs that manufacture and export industrial products and to companies that provide infrastructure necessary for the development of EPZs. Investors wishing to carry out business in EPZs can register as developers, operators or service providers. The criteria for investing in an EPZ include that:  At least 80% of the goods produced within the EPZ must be sold to export markets.  Annual turnover from the exported goods must be at least US$100,000 for local investors, and US$500,000 for foreign investors. Procedure The application process involves submitting an application form, a copy of the business plan, the location of the proposed investment, and a fee of US$250.

Incentives Incentives offered by EPZA include:  Exemption from payment of corporation tax, withholding tax and all other taxes and levies imposed by local government authorities in respect of products produced in EPZs, for a period of ten years.  Remission of customs duty, value added tax and any other tax payable in respect of goods purchased for use as raw materials, equipment or machinery, including all goods and services directly related to the manufacturing in the EPZs (excluding motor vehicles, spare parts and consumables).  Provision of a business visa at the point of entry to key technical, management and training staff for a maximum of two months. After that, the requirements to obtain a resident permit under the Immigration Act will apply.  Exemption from VAT on utilities and wharf age charges.

The Special Economic Zones (SEZ) Licensing  The right to obtain work permits for five foreign nationals on the project.  Payments of salaries and other benefits to foreign personnel employed in Tanzania in connection with the business enterprise. SEZ is a geographical area that has more liberal economic laws than the country's normal laws, designed to promote rapid economic growth by using fiscal and business incentives to attract investment and technology. EPZA also grants incentives to investors that set up businesses in SEZs in areas such as industrial parks, export processing zones, free trade zones, free ports, tourist parks, or science and technology parks.

Special economic zones include, Export Processing Zones, Free Ports, Free Trade Zones, Industrial Parks, Regional Headquarters, Science and Technology Parks, ICT Parks, Agricultural Free Zones & Tourism Development Zones and Business Incubation SEZ licenses are issued to new investors that intend to produce goods or services for export or domestic markets or for the generation of employment opportunities. To be eligible to carry out business within an SEZ, the company must be a new investment that can inject a minimum capital of US$5 million (for foreign investors) and US$1 million (for local investors). The application procedure for carrying out a business within an SEZ is open to any business, provided the nature of the business is such that it can be carried out within an SEZ. Incentives Incentives offered for registering in SEZs depend on the category of licence that is granted.

Incentives for the development of infrastructure ( Category A Investors) can include:  Exemption from payment of taxes and duties for machinery, equipment, heavy duty vehicles, buildings and construction materials and other goods of a capital nature that are used for the purposes of development of SEZ infrastructure.  Exemption from payment of corporation tax, withholding tax and property tax for an initial period of ten years.  Remission of customs duty, VAT and other taxes payable in respect of importation of one administrative vehicle, ambulances, firefighting equipment, fire fighting vehicles and up to two buses for employees' transportation to and from the SEZ.  Exemption from VAT on utilities charges.  The right to obtain work permits for five foreign nationals on the project.

Incentives offered for the sale of manufactured goods within the customs territory (Category B investors) can include:  Remission of customs duty, VAT and any other tax charged

SEZ/EPZ Licensing and Permits Land Ownership Under EPZA on raw materials and goods of capital nature related to the production in the SEZ.  Exemption from payment of withholding tax on interest on foreign sourced loan.  Remission of customs duty, VAT and other taxes payable in respect of importation of one administrative vehicle, ambulances, firefighting equipment, fire fighting vehicles and up to two buses for employees' transportation to and from the SEZ.  The right to obtain work permits for five foreign nationals on the project.

Incentives offered for producing goods for sale in export markets in non-manufacturing or processing sectors benefit from the same benefits afforded to Category A and B investors and can include some additional incentives:  Access to export credit guarantee schemes.  Exemption from payment of all taxes and levies imposed by the local government authorities for products produced within the SEZ for a period of ten years. Once an investor obtains the SEZ/EPZ license he or she does not require any other license except for highly regulated industries like food and drugs. (TFDA) EPZA issues the following types of licenses; 1.

Developer’s License This license is given to the investor who is investing in development industrial parks infrastructure (internal roads, security fence, landscape, warehouses and factories, provision of utilities like power, water, sewerage systems and telecommunications). The license is also given to the investor who wants to build a factory inside the industrial park or as standalone unit for only EPZ investors 2. Operator’s License This license is given to investors who are undertaking manufacturing operations. These operations may include processing activities like addition of value to the products to semi -final product or final product 3. Service Provider’s License This license is offered to investor who provides services and utilities to EPZ and SEZ investors within the industrial parks.

They offer services like banking, insurance, electricity supply, IT and ICT services strictly within the industrial park. All land in Tanzania is vested in the President of Tanzania as trustee for the nation. A foreign national, or foreign company, or a Tanzanian company wholly, or majority owned by foreigners, cannot own land in Tanzania unless it is held for investment purposes through a derivative right granted for a specified amount of time under a Certificate of Incentives issued to it by the

How an Investor may join EPZ/SEZ Program Why Invest In Tanzanian Economic Zones Tanzania Investment Centre or the Export Processing Zones Authority.

Easy, just follow the following steps;  Investor makes enquiry with EPZA to confirm investment procedures, eligibility criteria and availability of factory space or serviced land.  Investor submits a project proposal and completes application form which is completely filled to EPZA with a non-refundable fee of US$ 300  EPZA evaluates project and provides investor with letter of approval within 7 days  Investor incorporates EPZ company, locates in the zone, obtains environmental assessment of the premises/land so as to be able to obtain environmental approval (where required)  For zone development, EPZA facilitates declaration of the land which is done by the Minister for Industry and Trade.  Investor pays license fees and obtains SEZ / EPZ license. The license fee for SEZ / EPZ developer is US$ 5,000 for three years.

While annual fee for SEZ / EPZ user is US$1,000 per year payable three years consecutively.  Investor begins operations Because of the following;  World class Industrial Parks  Allowance to develop stand-alone EPZs  Lucrative Tax incentives  One Stop Service Centre for all service i.e. company incorporation, work & resident permits, TIC certificate, etc.  Variety of raw materials and skilled labour force at an affordable price.  Availability of preferential trade markets (EAC, SADC, AGOA, EU, Japan, China, etc.)

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