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The Special Economic Zones Bill, 2010 THE SPECIAL ECONOMIC ZONES BILL ARRANGEMENT OF SECTIONS PART I PRELIMINARY

Y Section 1. 2. 3. - Short title - Interpretation Objective and purpose of the Act

PART II ESTABLISHMENT, FUNCTIONS AND POWERS OF THE SPECIAL ECONOMIC ZONES AUTHORITY 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Establishment of the Special Economic Zones Authority - Functions and powers of the Authority Board of Directors - Tenure of office - Termination of appointment - Remuneration - Meetings of the Board - Committees of the Board - Disclosure of interest - Common seal of the Authority - Chief Executive Officer - Staff Protection from personal liability - Liability in Tort or contract

PART III FINANCIAL PROVISIONS 18. 19. 20. 21. - General Fund of the Authority - Financial year - Annual Estimates Accounts and Audit

PART IV- DECLARATION OF A SPECIAL ECONOMIC ZONE 22. 23. 24. - Declaration of a special economic zone - Activities permitted within a special economic zone Facilities within a special economic zone

The Special Economic Zones Bill, 2010 PART V LICENSING PROVISIONS. 25. 26. - Licenses - Register of licenses

PART VI SPECIAL ECONOMIC ZONE DEVELOPERS AND OPERATORS. 27. 28. - Qualifications of special economic zone developer and Powers of an economic zone developer operator

PART VII- SPECIAL ECONOMIC ZONES ENTERPRISES. 29. - Establishment of special economic zones enterprises

PART VIII- OPERATIONS WITHIN A SPECIAL ECONOMIC ZONE. 30. 31. 32. 33. 34. - Goods considered to be exported and imported into Kenya. - Goods within a special economic zone - Prohibited activities within the special economic zone - Removal of goods from the special economic zone - Receipts and payments of special economic zone enterprises

PART IX BENEFITS TO SPECIAL ECONOMIC ZONES ENTERPRISES 35. - Benefits accruing to special economic zone enterprises

PART X DISPUTE RESOLUTION


36. Disputes PART XI- MISCELLANIOUS PROVISIONS 37. 38. 39. - Power of the Minister to give directions - Regulations - General provisions of the Minister

PART XII- TRANSITIONAL PROVISIONS 40. Repeal 41. Saving provisions SCHEDULE Limitations on imports
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The Special Economic Zones Bill, 2010 SPECIAL ECONOMIC ZONES BILL, 2010 A Bill for an Act of Parliament to provide for the establishment of special economic zones; to provide for the promotion and facilitation of global and local investors, the development and management of enabling environment for such investments; to repeal Export Processing Zones Act and for connected purposes. Enacted by the Parliament of Kenya as follows:PART I PRELIMINARY
Short title.

1. This Act may be cited as the Special Economic Zones Bill, 2010.

Interpretation.

2.

In this Act, unless the context otherwise requires-

authority means the Special Economic Zones Authority established under section 4; Board means the Special Economic Zones Authority Board established under section 6; business incubation means an economic development tool designed to accelerate growth and success of entrepreneurial companies through business support resources and services. company has the meaning as in section 2 of the Companies Act or a company incorporated outside Kenya but registered in Kenya under the Companies Act; commercial activity means trading in, breaking bulk, grading, repacking or re-labelling of goods and industrial raw materials customs control means the measures applied to ensure compliance with the laws and regulations which the customs officers are responsible for enforcing; customs officer means a customs officer appointed under the
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Cap.486

The Special Economic Zones Bill, 2010


Cap. 472

Customs and Excise Act customs territory means the territory in which the customs laws of Kenya apply in full, but does not include a special economic zone; director means a member of the Board; duty means the fiscal, customs and excise duty for the time being levied under any written law; East African Community Common Market means the Partner States markets integrated into a single market in which there is free movement of capital, labour, goods and services; export means to(i) take or cause to be taken out goods or services out of the customs territory or into a special economic zone by land, sea or air or by any other mode, whether physical or otherwise. (ii) (ii) supply or provide services, from the customs territory to a Special Economic Zone provide goods or services from one Special Economic Zone Enterprise to another or Special Economic Zone Developer in the same or different Special Economic Zone

export processing zone means a designated part of a special economic zone predominantly oriented for export manufacturing; free port means a special economic zone adjacent to a port of entry (lake port, seaport, or airport) where imported goods may be unloaded for immediate transhipment, storage, re-packing, sorting, mixing or otherwise manipulated; free trade zone means a special economic zone where any goods introduced are generally regarded, in so far as import duty and taxes are concerned, as being outside the customs territory and are not subject to the usual customs control;
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The Special Economic Zones Bill, 2010 Fund means the general fund established under section 18; goods include all kinds of articles, wares, merchandise and stock and, where any such goods are sold under the Customs and Excise Act, include the proceeds of sale; information communications technology park means a designated area in a special economic zone where information technology related knowledge and service industries are attracted and facilitated through availability of buildings, specific or general infrastructure, available technical workforce and business support services. industrial park means a special economic zone with integrated infrastructure and environmental controls specific to the needs of an industrial area. import duties and taxes means customs duties and all other duties, taxes, fees or other charges which are collected on or in connection with the importation and exportation of goods but does not include fees and charges which are limited in amount to the costs of services rendered under this Act; Kenya Revenue Authority means the Authority established under section 3 of the Kenya Revenue Authority Act. licence means a licence issued under this Act; manufacture means to make, produce, fabricate, assemble, process or bring into existence by manual, mechanical, chemical or biochemical methods into a new product having a distinctive name, character or use and includes processes such as refrigeration, cutting, polishing, blending, repair, re-making and re-engineering. Minister means the minister for the time being responsible for trade. negative list" means a list of activities not allowed to be undertaken by special economic zone enterprises.

Cap. 472

Cap.469

The Special Economic Zones Bill, 2010 primary activities includes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, silviculture, sericulture, viticulture and mining. regional headquarters means an entity of regional executives and directors who are employed by foreign companies and are based in Kenya for the purpose of managing the affairs of those companies. science and technology park means a designated part of a special economic zone devoted to scientific and technological research including educational or research institutions for the development of science and technology based industries. special economic zone means a designated geographical area with liberal economic laws and with highly developed infrastructure or which has the potential to be developed as per the activities listed under Section 23(1) of the Act, and where any goods introduced and services provided are generally regarded, in so far as import duties and taxes are concerned, as being outside the customs territory but are duly restricted by controlled access and wherein the benefits provided under this Act apply; special economic zone enterprise means a corporate body; which has been licenced under this Act; special economic zone export means any product sold by a special economic zone enterprise for exportation direct or through the customs territory; special economic zones developer means a corporate body established to develop and administer a special economic zone under this Act; special economic zone import means any input or service supplied to a special economic zone enterprise within a special economic zone ,whether from outside or inside the customs territory; special economic zone operator means a corporate body engaged in the management of a special economic zone
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The Special Economic Zones Bill, 2010 designated under section 27; services means tradable services which(i) are covered under the General Agreement on Trade in Services annexed as 1B to the Agreement establishing the World Trade Organisation concluded at Marrakesh on the 15th day of April, 1994. may be prescribed by the Government of Kenya for the purposes of this Act

(ii)

tourist and recreational centre means a designated part of a special economic zone where accommodation and recreational facilities in accordance with guidelines issued by Special Economic Zones Authority. 3. (1) The principal objectives of the Act shall be to(a) develop all aspects of special economic zones with particular emphasis on developing integrated infrastructure facilities, provision of advice on the removal of impediments to, and creation of incentives for trade, services and manufacturing in areas designated as special economic zones; and (b) regulate and administer approved activities within the special economic zones.

Objectives and purposes

PART II

ESTABLISHMENT, FUNCTIONS AND POWERS OF THE SPECIAL ECONOMIC ZONES AUTHORITY


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The Special Economic Zones Bill, 2010 4. There is established the Special Economic Zones Authority as a body corporate with perpetual succession and a common seal which shall be capable in its corporate name of(a) suing and being sued; (b) taking, purchasing or otherwise acquiring, holding, charging and disposing of movable and immovable property; (c) having and managing its own general fund including borrowing and lending money; (d) entering into contracts; (e) doing or performing all such other things or acts necessary for the proper performance of its functions under this Act which may lawfully be done by a corporate body. 5. For the purposes of carrying out the objectives specified in section 3, the Authority may exercise, perform and discharge all or any of the following powers, duties and functions(a) advise the Minister on all aspects of establishment of special economic zones; (b) implement the policies and programmes of the Government with regard to the establishment of the special economic zones;

Establishment of the Special Economic Zones Authority.

Functions and powers of the Authority.

(c) identify and map the areas to be designated as special economic zones; (d) plan the development and maintenance, and to finance the basic infrastructure up to the perimeter of special economic zones; (e) undertake the provision of water and sewerage services in special economic zones;
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The Special Economic Zones Bill, 2010 (f) examine and process application for establishment of special economic zones and issue relevant approvals; (g) examine and process applications for licences by special economic zone developers, operators, and enterprises; and issue relevant licences; (h) promote and market special economic zones among investors; (i) issue certificates of origin to special economic zone enterprises for the purposes of a generalized system of preferences and other trade preferences given under bilateral or multilateral trade agreements; (j) act as a one-stop centre through which special economic zone enterprises can channel all their applications for permits and facilities not handled directly by the Authority; (k) process building plans and issue relevant approvals in consultation with the Ministry responsible for Physical Planning and other relevant Authorities; (l) perform administrative functions in relation to the designated special economic zones as would normally be performed by local authorities; (m) maintain current data on the performance of the programme in each individual special economic zone and enterprises; (n) enforce within the special economic zone compliance with customs procedures and other requirements for preventing the unauthorized use of designated special economic zones, enterprises and business incubators; (o) enforce compliance with the banking procedures and other requirements for preventing the unauthorized use of approved special economic zone activities;
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The Special Economic Zones Bill, 2010 (p) draw up and regularly update a negative list of activities that are not allowed in the Special Economic Zones; (q) approve business services to be rendered within a special economic zone. (r) suspend or cancel the licence of a special economic zone enterprise or a special economic zone developer which is in the violation of the Customs and Excise Act, and the Value Added Tax Act; and
Cap. 472 Cap. 476

(s) do all such other acts as may be incidental or conducive to the attainment of the objective of the Authority or the exercise of its powers under this Act. (2) Without prejudice to the generality of the powers conferred under this Act, the Minister shall make rules in consultation with the Authority as may be required for the purpose of ensuring orderly and fair development and operation of special economic zones, enterprises and export business incubator enterprises, and in particular rules to(a) determine application procedures and criteria for the approval of special economic zones, developers, operators, enterprises or business incubators; and (b) determine procedures for providing the benefits accruing to special economic zone developers, operators and enterprises; (c) ensure adequate security within the special economic zones; (d) determine the form of the licences to be issued under this Act and the procedures for amendment and revocation of the licences; (e) determine entry of personnel into a special economic zone; and

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The Special Economic Zones Bill, 2010 (f) require information from special developers, operators and enterprises. economic zone

(3)The Authority shall be exempt from payment of any stamp duty chargeable under the Stamp Duty Act.

Cap 480

Board of Directors.

6. (1) There is established a Board of Directors of the Special Economic Zones Authority and shall consist of the following directors(a) a chairman to be appointed by the President; (b) the Permanent Secretary to the Treasury; (c) the Permanent Secretary in the Ministry for the time being responsible for Industry; (d) the Permanent Secretary in the Ministry for the time being responsible for Trade; (e) the Permanent Secretary in the Ministry for the time being responsible for Information and Communications Technology; (f) the Permanent Secretary in the Ministry for the time being responsible for Transport; (g) the Permanent Secretary in the Ministry for the time
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The Special Economic Zones Bill, 2010 being responsible for Regional Development Authorities; (h) the Commissioner General, Kenya Revenue Authority; (i) the Commissioner of Lands; (j) the Chief Executive of the Kenya Investment Authority; (k) the Chief Executive of the Kenya Export Promotion Council; (l) the Chief Executive of the Kenya Private Sector Alliance; (m)not more than three other directors appointed by the Minister from the private sector, who have experience and expertise in any of the following:(i) manufacturing, (ii) information communications technology, (iii) trade, (iv) law, (v) financial matters; and (vi) agriculture and agro-processing. (n) a Chief Executive appointed by the Minister after consultation with the Board who shall be an ex-officio director and secretary to the Board. (2) The Board shall have the overall management, development and control of the Special Economic Zones and all functions vested to the Authority by this Act.
Tenure of office.

7. The chairman or a director appointed under section 6 (j) shall hold office for a period of three years and shall be eligible for re-appointment for one other term. 8. The Minister may terminate the appointment of a director of the Board appointed under section 6(j) if the director(a) delivers to the Minister a written resignation of the
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Termination of appointment

The Special Economic Zones Bill, 2010 appointment; (b) is, on the advice of the Board, incapacitated by mental or physical illness or is otherwise unable or unfit to discharge the functions of a director or is unable to continue as a director; (c) is, without reasonable cause, absent for three consecutive meetings of the Board; (d) is adjudged bankrupt or enters into a composition scheme or arrangements with his creditors; (e) is sentenced by a court to imprisonment for a term of six months or more; or (f) is convicted of an offence involving dishonesty; fraud or moral turpitude.

Remuneration.

9. The directors of the Board shall be paid such remuneration and allowance out of the general Fund of the Authority as may be determined by the Minister.

Meetings of the Board.

10. (1) The chairman of the Board shall convene a meeting at least once every three months and whenever the chairman receives a written request by at least two directors, and in the absence of the chairman, meetings shall be convened by the Chief Executive and the directors present shall elect one of the directors to preside as chairman. (2) The quorum of the Board shall be one half of the total number of the Board. (3) The Board may, subject to the requirements of the quorum, regulate the procedure in regard to meetings and the transaction of business at the meetings. (4) If the chairman of the Board by reason of extended
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The Special Economic Zones Bill, 2010 illness or absence, is temporarily unable to perform the duties of his office, the directors may elect a director among the directors appointed under section 6(j) to act in the place of the chairman during the period of absence; (5) The chairman may, at any time resign by a letter addressed to the President and the resignation shall take effect upon being accepted by the President.

Committees of the Board.

11. The Board may from time to time establish committees for the better carrying out of its functions, powers and duties under this Act. 12. (1) Any director of the Board who has a direct or indirect personal interest in a matter being considered or to be considered by the Board shall, as soon as reasonably practicable after the relevant facts concerning the matter have come to his knowledge, disclose the nature of the interest to the Board. (2) A disclosure of interest made under subsection (1) shall be recorded in the minutes of the meeting of the Board, and if either the director or majority of the directors of the Board believe that the interest of that director in the matter may influence his judgement, that director shall not participate in the consideration or discussion of or vote during any deliberations on the matter by the Board.

Disclosure of interest.

Common seal of the Authority.

13. (1) The common seal of the Authority shall be kept in the custody of the Chief Executive and shall not be affixed to any instrument or document except as authorised by the Authority. (2) All documents other than those required by law to be under seal, made by, and all decisions of the Authority may be given under the hand of the chairman, or, in the case of a decision taken at a meeting at which the chairman is not present, under the hand of the director presiding at that meeting.

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Chief Executive Officer.

14. (1) There shall be a chief executive officer of the Authority appointed by the Minister, on the recommendation of the Board on terms and conditions specified in the instrument of his appointment. (2) The Chief Executive shall, subject to the general direction and control of the Board, be responsible for the management of the Authority, the exercise, discharge and performance of its objectives, functions and duties, and the administration and control of the staff. (3) The Minister may, on recommendation of the Board, terminate the appointment of the chief executive officer. 15. (1) The Board may appoint staff as it considers necessary for the efficient discharge of its responsibilities and functions. (2) The staff appointed under subsection (1) shall be remunerated at a rate to be determined by the Authority and shall be subject to conditions of service as may be determined by the Authority.

Staff.

Protection from personal liability.

16. (1) The directors or staff of the Authority shall not be personally liable for an act which is done or purported to be done in good faith by that person, on the direction of the Authority or in the performance or intended performance of any duty or in the exercise of any power under this Act or the regulations made thereunder. (2) Any expenses incurred by a person referred to in subsection (1) in any suit or prosecution brought against him before any court in respect of any act which is done or purported to be done by him under this Act on the direction of the Board shall, if the court holds that that act was done in good faith be paid out of the general fund of the Authority, unless the expenses are recovered by him in that suit or prosecution.

Liability in

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tort or contract.

17. The provisions of section 16 shall not relieve the Board the liability in tort or contract, to pay compensation or damages to any person for any injury to him, his property or any of his interests caused by the exercise of any power conferred by this Act, or any other written law. PART III- FINANCIAL PROVISIONS

General Fund of the Authority.

18. (1) There is established a general fund of the Authority. (2) The funds of the Authority shall comprise all such sums of money as may be(a) appropriated by Parliament; (b) paid as fees, rents or service charge for use of properties belonging to the Authority under this Act; and (c) received by the Authority as grants, donations, loans for its operations subject to Government Financial Management Act. (3) There shall be paid out of the fund all such sums of money required to defray the expenditure incurred by the Authority in the exercise, discharge and performance of its objectives, functions and duties under this Act. 19. The financial year of the Authority shall be the period of twelve months ending on the 30th June every year.

No. 5 of 2004.

Financial Year.

Annual Estimates.

20. (1) The Board shall, before the commencement of every year cause to be prepared the estimates of revenue and expenditure of the Authority for that financial year. (2). The annual estimates shall make provisions for all the estimated expenditure of the Authority for the financial year concerned and in particular shall provide for16

The Special Economic Zones Bill, 2010 a) payment of salaries, allowances and other charges in respect with the staff of the Authority; b) payment of pensions, gratuities and other charges in respect of retirements benefits which are payable out of the funds of the Authority; c) the funding of promotion and marketing of Special Economic Zones; d) the funding of training, research and development activities of the Authority; e) the acquisition, maintenance, repair and replacement of equipment and other movable and immovable property of the Authority; f) the creation of reserve funds to meet future or contingent liabilities; and g) to fund the expenditure incurred by the Authority in the exercise, discharge, and performance of its objectives, functions and duties under this Act. (3) The annual estimates shall be approved by the Board before the commencement of the financial year which they relate.
Accounts and Audit.

21. (1) The Authority shall cause proper books of accounts to be kept of its income and expenditure, assets and liabilities and all other financial transactions of the Authority. (2) The Board shall within three months from the end of the financial year submit to the Controller and AuditorGeneral or an auditor appointed under subsection (3), the accounts of the Authority together with a statement of-

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The Special Economic Zones Bill, 2010 (a) income and expenditure during the year; and

(b) assets and liabilities of the Authority on the last day of that year. (3) The accounts of the Authority shall be audited by and reported upon in accordance with the provisions of the Public Audit Act. PART IV DECLARATION OF A SPECIAL ECONOMIC ZONE AND ACTIVITIES WITHIN A SPECIAL ECONOMIC ZONE.
Declaration of Special Economic Zones .

22. (1) The Minister may, on the recommendation of the Authority, and by notice in the Gazette, declare any area including land and premises in Kenya to be a special economic zone. (2) A declaration of a special economic zone under subsection (1) shall define the limits of the zone and shall remain in force until revoked by the Minister, on the recommendation of the Authority, by order in the Gazette.

Activities permitted within a special economic zone

23.(1) The activities eligible to be carried out within special economic zones includes primary activities, industrial activities, service activities, ICT and related services, tourism and recreational services, regional supervisory services, applied research and development activities, commercial activities, other services not listed under this section and classified under the business service permit. (2) Where manufacturing and commercial activities involving goods manufactured outside Kenya are carried on by a special economic zone enterprise, the two activities shall be physically separated. (3) Where commercial activities involve goods manufactured outside Kenya, such goods shall be clearly labelled as products of the country where such goods were manufactured.

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The Special Economic Zones Bill, 2010 (4) The Authority shall give notice to the Kenya Revenue Authority of every special economic zone enterprise licenced under this section specifying:(a) the activities in respect of which the enterprise is licenced; and (b) any conditions attached to the licence. 24.(1)The Authority may require the special economic zone developer to provide and maintain in a special economic zone such facilities including adequate enclosure to separate a special economic zone from the customs territory, as it may consider necessary for the proper and efficient function of the zone. 9 (2) The Authority may at its discretion order the exclusion or removal from a special economic zone of any goods or discontinuance of any activity or operations which in its opinion are dangerous or prejudicial to public interest, health or safety: Provided that the Authority shall not issue an order under this section without first giving such a person an opportunity of being heard. (3) The customs officer in each special economic zone shall offer on-site inspection to the special economic zone for imports into, and exports out of, the special economic zone. (4) A person who contravenes this section commits an offence and is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding three years or both. PART V LICENSING PROVISIONS

Facilities within a special economic zone

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Licenses

25. (1) A person shall not carry on business as a special economic zone developer, operator or an enterprise or export business incubator or hold himself out as providing or maintaining activities or facilities within a special economic zone unless that person has been licensed as a special economic zone developer or operator or enterprise or export business incubator enterprise as the case may be. (2) The Authority shall render its decision on the designation of a special economic zone and all other approvals required under this Act within two working days from the date on which the completed application form together with relevant supporting documents for the relevant approval or the licence has been received by the Authority. (3) A licence issued under this subsection shall be in the prescribed form.

Register of licences.

26. The Authority shall keep in a form as it considers appropriate, a register of the holders of current licences issued under this Act specifying(a) the company name; and (b) the address of the principal place at which the company carries on business; (2) Where(a) the holder of the licence ceases to carry on the business to which the licence relates; or (b) a change occurs in any particulars which are required to be entered in the register of licence holders with respect to the holder of a licence, the holder shall within fourteen days of the occurrence of the event concerned give to the Authority particulars of the change in the prescribed form. PART VI SPECIAL ECONOMIC ZONE DEVELOPERS AND OPERATORS
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Qualifications of a special economic zone developer and operators.

27. (1) A special economic zone developer and operator shall(a) be a company incorporated in Kenya for the sole purpose of developing and operating a special economic zone; (b) have the necessary capital and expertise required for developing the special economic zone; and (c) except for a special economic zone operator appointed under section 22, own or lease land or premises for a minimum period of thirty years within the special economic zone. (2) A special economic zone developer shall, on application, receive a special economic zone operators licence from the Authority if it qualifies under the criteria prescribed by the Authority. 28.A special economic zone developer shall have powers to; (a) act or appoint a special economic zone operator to undertake management and administration of the special economic zone on its behalf subject to section 24; (b) lease, sub-lease or sell land or buildings to licensed special economic zone enterprises, and charge rent or fees for other services that may be provided, in convertible foreign currency; (2) The special economic zone developer shall(a) make improvements to the special economic zone site and its facilities according to the plans approved by the Authority; (b) provide or facilitate provision of infrastructure and other services according to the design and engineering studies submitted to the Authority together with the application; (c) provide adequate enclosures to segregate the zone area from the customs territory for the protection of revenue together with suitable provisions for the movement of
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The Special Economic Zones Bill, 2010 persons, conveyances, vessels and goods entering or leaving the zone; (d) provide adequate security on the site office accommodation and facilities for customs as determined by the Authority; (e) adopt rules and regulations for businesses within the zone, which shall promote its safe and efficient operations; (f) maintain adequate and proper accounts and other records in relation to its business and report on zone activities, performance and development to the Authority on an annual basis or as required by the Authority, the Kenya Revenue Authority, the Central Bank, the Kenya National Bureau of Statistics or other relevant authorities; and (g) register any lease agreements and services. (3) The accounts and records required under paragraph (f) shall be maintained in English. (4) A special economic zone developer or a special economic zone operator who fails to maintain adequate and proper accounts and other records as required by this section commits an offence and liable to a fine not exceeding three hundred thousand shillings or to imprisonment not exceeding six months or both.

PART VII SPECIAL ECONOMIC ZONES ENTERPRISES


Establishment of special economic zone enterprises.

29. (1) A special economic zone enterprise shall not be established, and the benefits described in part IX shall not accrue to any enterprise, unless the special economic zone enterprise holds a valid licence issued by the Authority.

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The Special Economic Zones Bill, 2010 (2) The Authority shall grant a licence if the application meets the objectives of this Act and if the proposed business enterprise(a) is incorporated in Kenya, whether or not it is one hundred percent foreign owned, for the sole purpose of producing goods or services for export within a special economic zone; (b) proposes to engage in any activity or activities eligible to be undertaken by a special economic zone enterprise or export business incubator enterprise in the special economic zone; (c) shall not have a deleterious impact on the environment or engage in unlawful activities, impinging on national security or may prove to be a health hazard; and (d) conducts business in accordance with the laws for the time being in force save for any exemptions that may be granted from time to time. PART VIII OPERATIONS WITHIN SPECIAL ECONOMIC ZONES 30. Unless otherwise provided under this Act or under any other written lawGoods to be considered to be exported and imported into Kenya.

(a) goods which are taken out from any part of the customs territory and brought into the special economic zone or services provided from part of the customs territory to a special economic zone shall be deemed to have been exported from Kenya and shall be paid for in convertible currency; and (b) goods which are brought out of a special economic zone and taken into any part of the customs territory for use therein or services provided from a special economic zone to any part of the customs territory shall be deemed to be imported.

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Goods within a special economic zone

31.(1) Subject to section 30, goods within a special economic zone shall not be taken out of the zone except(a) for export; or (b) for export into the customs territory, with the approval of the Authority and subject to the import and customs procedures and payment of import duties; or (c) for repair and maintenance or processing or conversion with prior approval of the Authority and under supervision of customs and subject to any conditions as may be imposed. (2) Subject to section 30, services provided by a special economic zone enterprise shall be provided to(a) persons outside Kenya; or (b) other special economic zone enterprises in furtherance of the export activities of such enterprises subject to approval of the Authority; or (c) persons in the customs territory subject to approval of the Authority.

Prohibited activities within a special economic zone

32.(1) No retail trade in goods produced in the special economic zone or imported into the special economic zone shall be conducted within the special economic zone except with the approval of the Authority and in areas designated as retail outlets licensed by the Authority. (2) Goods manufactured in a special economic zone shall not be used in the zone for personal consumption. (3) A person shall not carry on business in a Special Economic Zones involving the importation or handling of used apparel, including used clothing or footwear. (4) A person who contravenes this section is guilty of an offence and is liable to a fine not exceeding two million shillings or imprisonment for a term not exceeding three years or to both.
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The Special Economic Zones Bill, 2010

Removal of goods from a special economic zone

33.(1) Subject to this Act, goods within a special economic zone may(a) be removed under supervision of a customs officer from the zone for export or sent into another special economic zone or bonded factory, either in its original package or otherwise; (b) unless otherwise directed by the Authority(i) be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed, or otherwise manipulated or be manufactured in accordance with the provision of this Act; or (ii) be destroyed under the supervision of the Customs Officer. (2) Subject to this Act, goods of any description which would be used directly for the manufacture of other goods by a licensed special economic zone enterprises and business incubator or goods manufactured in any part of the customs territory which are meant for export may be brought into a special economic zone. (3) A person who contravenes this section is guilty of an offence and is liable to a fine not exceeding two million shillings or imprisonment for a term not exceeding three years or both and the goods shall be forfeited under the Customs and Excise Act and the EAC Customs Management Act. 34. (1) Unless otherwise provided under this Act or under any other written law-

Receipts and payments of special

(a) payments of funds by a special economic zone enterprise which may be received by a resident or non-resident of the customs territory and debited from the foreign
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The Special Economic Zones Bill, 2010


economic zones enterprises.

currency account legally maintained and operated by a special economic zone enterprise shall be subject to the provisions of the Central Bank Act applicable to all transactions between such persons and non-residents; (b) receipts of funds by special economic zone enterprises which may be paid by residents or non-residents as defined under the Banking Act shall only be credited into foreign currency accounts legally maintained and operated by the special economic zone enterprises provided those payments arise in relation to authorized special economic zone products or other transactions duly approved under the Central Bank Act; and (c) all currency transactions between special economic zone enterprises and non-resident persons, resident outside the customs territory, shall be in accordance with the Central Bank Act. (2) Notwithstanding subsection (1), all financial transactions, including payment of salaries and wages, between special economic zones enterprises and persons resident in Kenya shall be carried out through commercial bank accounts. PART IX BENEFITS TO SPECIAL ECONOMIC ZONE ENTERPRISES

Benefits accruing to special economic zone enterprise. Cap.472 Cap476

Supra

35 (1) The special economic zone enterprises, developers, operators and the export business incubator enterprises shall be granted exemption from all existing and future taxes and duties payable under the Customs and Excise Act, EAC Customs Management Act and Value Added Tax Act on all special economic zone imports for use in the eligible business activities of the special economic zone enterprise including, machinery and equipment, spare parts, tools, raw materials, intermediate goods, construction materials and equipment, office equipment and supplies, and transportation equipment subject to the limitations on goods specified in the First Schedule to this Act and in accordance with the conditions specified in the Customs and Excise Act, EAC Customs Management Act and the Value
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The Special Economic Zones Bill, 2010 Added Tax Act. (2) Subject to subsection (1), the special economic zone enterprises, developers, zone operators and the export business incubator enterprises shall be granted the following exemptions(a) exemption from the payment of income tax in respect of Freeport, free trade zone, and commercial enterprises ; (b) exemption from the payment of income tax as specified in the Income Tax Act as follows;
Cap.470

(i) Special Economic Zone Developers and Operatorsfor the first ten years from the date of completion of the development, except that the income tax rate shall be limited to twenty per cent for the ten years following the expiry of the exemption granted under this paragraph. (ii) Special IncubatorsEconomic Zones Business

For the first ten years from the date of the first sale except that the income tax shall be limited to twenty per cent for the next ten years following the expiry of the exemption granted under this paragraph. (iii) Export Processing Zones Export manufacturing and Export Service enterprisesfor the first ten years from the date of the first sale, except that the income tax rate shall be limited to twenty per cent for the next ten years and twenty five per cent thereafter. (iv) Special Economic Zones Technology Park Enterprisesfor the first ten years from the date of the first
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The Special Economic Zones Bill, 2010 sale, except that the income tax shall be limited to twenty per cent thereafter for the life of the Enterprise. Provided that this exemption shall not apply in respect of Industrial Parks, Agricultural Free Zone Enterprises and Tourism and Recreational Enterprises and Regional Headquarters Enterprises who shall pay income tax rate at twenty per cent. (b) exemption from the payment of withholding tax on dividends and any other payments made to non-residents during the period that the special economic zone enterprise is exempted from payment of income tax under paragraph (c); (c) exemption from stamp duty on the execution of any instrument relating to the business activities of special economic zone enterprise; except for Agricultural Free Zone enterprises, Regional headquarters and Industrial Park Enterprises who shall be entitled to a fifty per cent reduction of stamp duty payable; (d) exemption from quotas or other restrictions or prohibitions on import or export trade with the exception of trade in firearms, military equipment or other illegal goods; (e) exemption from the provisions of the Companies Act relating to allotment of shares to non-residents

(h)

exemption from the provisions of the Foreign Investment

Protection Act relating to certificate for approved enterprise; (i) exemptions from the provisions of the Statistics Act; (j) exemption from the payment of advertisement fees and Business service permit fees levied by Local Authorities and by laws made under that Act; (k) exemption from Hotel licences, and Restaurant licence issued
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Cap 486

The Special Economic Zones Bill, 2010 under the Hotels and Restaurants Act;
Cap. 518.

(l) exemption from general liquor licence and hotel liquor Licence under the Liquor Licensing Act; (m) exemption from licence under the Food, Drugs and Chemical Substances Act to use premises to sell, prepare, store or display for sale, any food; (n) exemption from manufacturing licence under Tea Act; (o) exemption from licence to buy, sell, mill, warehouse, export or otherwise deal in or transact business in coffee under the Coffee Act (p)exemption from registration of large scale farms under section 22(6) of the Agriculture Act; (q)exemption from licence for a factory under the Sisal Industry Act; (r) exemption from registration, Dairy Managers and Retail licence and licence as a purveyor of milk under the Dairy Industry Act; (s)exemption from certificate of registration and licence to catch fish or for a foreign vessel under the Fisheries Act;

No. 4 of 2006.

Cap. 265

Cap 494.

Cap 121.

Cap 254.

Cap 343.

Cap 333

(t)exemption from manufacturing licence under the Pharmacy and Poisons Act; (u)exemption from Private Carriers licence under the Transport Licensing Act; (v)exemption from licence to deal in motor vehicle components or accessories under the Motor Vehicle Components and Accessories Act; (w)exemption from licence to trade in unwrought precious metals under the Trading in Unwrought Precious Metals Act;

Cap. 318 Cap 340

Cap 341.

Cap. 336

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The Special Economic Zones Bill, 2010 (x)exemption from Diamond Dealers Licence under the Diamond Industry Protection Act;
Cap 378.

(y)exemption from Filming Licence under the Films and Stages Plays Act; (z) entitlement to Class A expatriate work permits for technical, supervisory and managerial staff granted within forty days of application with a limit of up to five per cent of total workforce and Class H work permits for directors within thirty days of application; (aa)exemption from rent or tenancy controls under the Landlord and Tenant (Shops, Hotels and Catering establishments) Act; (bb)exemption from licences issued under the Kenya Information and Communication Act;

Cap 224

Cap. 404

Cap 520

Cap 309

(cc)any other exemptions as may be granted by the Minister by notice in the Gazette.
Cap. 310

Cap. 222

Cap. 301

Cap. 411A

PART X - DISPUTE RESOLUTION 36. (1) Where a dispute arises between a special economic zone enterprise and the Authority or the Government in respect of a business enterprise, all efforts shall be made to settle the dispute through negotiations and mutual agreement for an amicable settlement.
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Disputes

The Special Economic Zones Bill, 2010 (2) A dispute under subsection (1) which is not settled may, at the option of the offended party, be submitted to arbitration in accordance with any of the following methods as may be mutually agreed by the parties(a) in accordance with the rules of procedure for United Nations UNCTRAL; or b) within the framework of any bilateral or multilateral agreement on investment protection to which the Government and the country of which the investor is a national or are parties; or (c) In accordance with the Arbitration Act.
No 4 of 1995.

(3) If the parties do not agree to the mechanisms of settlement of dispute under subsection 2(a) and (b) within fourteen days, the Arbitration Act shall apply. PART XI MISCELLANEOUS PROVISIONS 37. (1) The Minister may give directions to the Authority as the Minister may consider necessary for the proper functioning of a Special economic zone or for the purpose of protection of revenue and foreign exchange earnings. (2) The Minister may from time to time direct the Authority to furnish in such form as he may require returns, accounts and any other information with respect to the work of the Authority. 38. The Minister may make regulations in respect of any matter required by the Act to be prescribed or in respect of which regulations are authorized to be made. . 39. (1) The Minister may, for health, environmental or public security reasons and by order published in the Gazette, exclude goods or services from the provisions of this Act. (2) The Minister may, for health, environmental or public security reasons and by order published in the Gazette prohibits
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Power of the Minister to give directions.

The Special Economic Zones Bill, 2010 any goods from being taken into a special economic zone

PART XII - TRANSITIONAL PROVISIONS 40. The Export Processing Zones Act is repealed.

Repeal Cap.517

Saving provisions.

41. (1) Notwithstanding the repeal of the Export Processing Zones Act all the licences issued under that Act and in force immediately before the commencement of this Act shall be considered to have been granted under the provisions of this Act, and shall remain in force until revoked in accordance with any terms set out in the licence or renewed under this Act. (2) Any regulation or other instrument made or issued under the Export Processing Zones Act shall continue to have effect as if such regulation or other instrument were made or issued under this Act. (3). All the property, assets, rights and liabilities, obligations and agreements including (any contracts of employment) vested in, acquired, incurred or entered into by or on behalf of the Export Processing Zones Authority shall be considered to be vested in or to have been acquired by the Special Economic Zones Authority and accordingly every such right, liability, obligation or agreement may be enforced by or against the Special Economic Zones Authority. (4) All persons who, before the commencement of this Act are employed by the Export Processing Zones Authority shall at the commencement of this Act be considered employees of the Special Economic Zones Authority and employed in accordance with this Act. (5) Where at the commencement of this Act any penalty other than dismissal has been imposed on any employee of the Export Processing Zones Authority in accordance with the
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Cap.517.

The Special Economic Zones Bill, 2010 disciplinary proceedings against that employee, and the penalty has not been or remains to be served by that employee, that employee shall, on his transfer to the Special Economic Zones Authority, serve or continue to serve such penalty to its full term as if it had been imposed by the Special Economic Zones Authority. SCHEDULE LIMITATIONS ON IMPORTS The following goods may be imported free of import duty and value added tax by a special economic zone enterprise or a special economic zone developer. Subject to the following limitations:i) One motor vehicle for each of the Directors of a special economic zone enterprise, Developer and Operator provided that it is registered in the name of the said Director; ii) Not more than three motor vehicles of any type whether passenger, utility or vessel by a special economic zone developer, operator or enterprise for use in its eligible business activities subject to the prior approval in writing by the Authority. Amos Kimunya, Minister for Trade

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The Special Economic Zones Bill, 2010

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