Establishing Export Processing Zones: The Minister, with advice from the Board and relevant authorities, can create or designate areas as Export Processing Zones (EPZs) by publishing a notice. These zones can be developed, partially developed, or even just single factory units. EPZA formally began operating in 2007 with a few single factory EPZ units. The experience of the factory units convinced the Government of Tanzania, through EPZA, to construct the first state-owned industrial park at Mabibo-External in Dar es Salaam. The Industrial Park was named after the 3rd Tanzanian President Benjamin Mkapa, therefore Benjamin William Mkapa Special Economic Zone (BWM-SEZ). The Zone is occupied by different industries manufacture a range of products across sectors such as garments, agro-processing, engineering, and high-tech. This is good news for the economy.
Purpose of EPZ: The main goals of establishing EPZs are to attract investment for export-focused industries, boost foreign exchange earnings, create jobs and skilled labor, encourage the transfer of new technology, connect the local economy with international markets, and promote the processing of local raw materials for export.
Operating within an EPZ: To conduct business or retail trade within an EPZ, you generally need a license from the Authority. There are also restrictions on removing goods from an EPZ, using them for consumption within the zone, and entering or residing in an EPZ without authorization. Exceptions are made for certain government personnel and those employed by investors or public utility providers acting in their official capacity.
Licensing and Regulation: The Authority is responsible for issuing licenses to businesses operating in EPZs. These licenses essentially replace other business and industrial licenses. The Authority can cancel or suspend a license if the holder fails to establish the business, suspends activities for too long, doesn't comply with the license terms or regulations, or provides false information.
Incentives for Investors: Investors in EPZs are eligible for various incentives, including access to export credit guarantees, exemption from customs duties, VAT, and other taxes on raw materials and capital goods for production, a corporate tax holiday for the first ten years, exemption from withholding tax on dividends and interest for the first ten years, and exemption from local government taxes and levies for a decade. Other benefits include streamlined customs procedures, business visas for essential staff, and the ability to transfer profits and other payments in freely convertible currency.
Movement of Goods: Goods that benefit from tax exemptions within an EPZ can generally only be exported outside the country. Limited sales into the local customs territory are permitted, but they are subject to obtaining necessary permits, paying applicable duties and taxes, and typically not exceeding a certain percentage of annual production.
Work Permits and Labor: The government facilitates work permits for essential foreign management and technical staff if those skills are not available locally. The number of such permits is determined in consultation with the labor authorities. The Authority may also recommend exemptions from training levies for investors who train local employees.
Authority's Role: The Export Processing Zones Authority is an autonomous government agency responsible for initiating, developing, and managing publicly owned EPZs. Its functions include acquiring land, providing infrastructure and utilities, promoting the zones, ensuring security, and offering commercial information. The Authority is governed by a Board.
Dispute Resolution: Disputes between a licensed EPZ business and the Authority can be settled through arbitration, either internationally or within the framework of relevant agreements, if the license includes such a provision. This arbitration is binding.
A. ELIGIBILITY CRITERIA FOR EPZ LICENSING
1. New Investment
2. Minimum annual export turnover of US$ 100,000 for local investors and 500,000 for foreign investors
3. At least 80% of goods produced must be exported
B. ELIGIBILITY CRITERIA FOR SEZ LICENSING
1. New investment
2. Minimum capital of US$ 100,000 for Local investors and 500,000 for Foreign Investors
3. The investment must be located within the Special Economic Zones parks
C. LICENSING PROCEDURES
1. The investor makes an inquiry with EPZA to confirm investment procedures, eligibility criteria as well as the availability of factory space or serviced land.
2. Investor incorporates SEZ Company, locates premises or land, and obtains an environmental approval appropriate to the nature of the project.
3. The investor submits a project proposal and completed the application form.
4. EPZA evaluates the project proposal and provides the investor with a letter of approval.
5. In case the Investor is asking for Zone development, EPZA will facilitate a declaration of land, which is approved by the Minister for Industry and Trade.
6. Upon completion of the above-mentioned steps, the Investor will be able to start his operations. In practice, the above processes take a maximum of 14 working days
D. Checklist when applying for Developer License
1. Copy of Memorandum and Articles of Association/Charter/Constitution
2. Copy of the Certificate of Incorporation of the Company.
3. Detailed Export Business Plan by products, Markets and Others.
4. Environmental Impact Assessment (EIA) Report (Obtained from NEMC
5. Copy of Receipt of Initial Fees i.e. a one-time (non-refundable) application fee
6. Copy of Receipt of Site Inspection fee
7. Copy of Lease Certificate/Title Deed (for Operator & Service Provider).
8. Filling the EPZ/SEZ investment application form
9. Architectural drawings/design of proposed industrial shed(s)/facility(s). And Work Plan.
10. Introductory bank letter or current Company’s bank statement
11. Submission of a brief application letter
EPZA ISSUES THE FOLLOWING TYPES OF LICENSES
I. SEZ and EPZ Developer’s License
II. SEZ Operator (Zone Management Company)
III. EPZ License (Export Processing Zone License)
IV. SEZ User License
V. SEZ permit