Clarifications on Free-Zone Fees an

The last days of the past month coincided with two clarifications undertaken by the General Authority for Investment and Free Zones (“GAFI”) related to the operations of projects in free zones. The first was in the form of an announcement[1] by GAFI on 28 April 2019 regarding the calculation of GAFI-related fees to be charged to projects already operating in public and private free zones prior to the enactment of the new Investment Law No. 72 of 2017 (the “Law”).[2] GAFI refers to a legal opinion it requested from the State Council on the subject, which was not directly dealt with in either the Law or its Executive Regulations. In this respect, the State Council was of the opinion of following the rules for calculating GAFI-related fees provided for in the older Investment Law No. 8 of 1997 until the expiration of the activity license for these projects,[3] in which case the rules of the new Law would apply upon license renewal.[4] The announcement also states that GAFI’s board of directors approved the application of this legal opinion to similar situations. In accordance with this, companies could be refunded the difference in fees starting 1 July 2019. Such compensation is to be done by discounting 50% of GAFI’s fees collected from these companies every three months. On a different note, GAFI issued circular No. 31 of 2019[5] through which it clarifies the regulations related to free-zone projects relinquishing their sites to other new or existing free-zone projects. The circular does not add much to what has already been stipulated in the new Law and its Executive Regulations. However, it highlights that a project wishing to relinquish its site must comply with the relinquishment deadline given to it, provided that this does not extend beyond six months from the date of notification made by the free zone’s board of directors. It is worth noting that the Executive Regulations specify that terminated free-zone projects or those with revoked approvals must handover (relinquish) their allocated sites to the free zone’s administration empty and evacuated (in case of on-site construction) within six months from the date of notification. Within this half a year, a project could relinquish its site including any constructions thereon to another project (whether new or operative) after obtaining GAFI’s approval, with a specified fee of 1% of the value of the construction (as evaluated by GAFI) charged by GAFI.   [1] GAFI Announcement dated 28 April 2019 on the calculation of GAFI-related fees to be charged to projects already operating in public and private free zones prior to the enactment of the new Investment Law No. 72/2017. [2] The new Investment Law came into effect on 1 June 2017. [3] As provided for in Article 35 of the old Investment Law No. 8/1997. [4] As provided for in Article 41 of the new Investment Law No. 72/2017. [5] GAFI Circular No. 31/2019 with regulations related to free-zone projects relinquishing their sites to other new or existing free-zone projects.