Law on Technological Industrial Development Zones

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GOVERNMENT OF THE REPUBLIC OF MACEDONIA

Directorate for Technological Industrial Development Zones

LAW ON TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONES

Part I. GENERAL PROVISIONS

Part II. INCENTIVES FOR INVESTING IN THE TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONE

Part III. CONDITIONS AND MANNER OF ESTABLISHING A TIDZ

Part IV. DIRECTORATE FOR TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONES

Part V. PROCEDURE FOR ESTABLISHING A TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONE

Part VI. ACTIVITIES THAT MAY BE CARRIED OUT IN A TIDZ AND SPECIAL CONDITIONS...

Part VII. APPLICATION OF CUSTOMS REGULATIONS

Part VIII. TERMINATING THE OPERATION OF THE TIDZ AND TERMINATING THE OPERATION...

Part IX. MISDEMEANOUR PROVISIONS

Part X. TRANSITIONAL AND FINAL PROVISIONS

Skopje, February 2007


I. GENERAL PROVISIONS

Subject of the Law
Article 1
This Law shall regulate the incentives for investing in technological industrial development zones, the conditions, the manner and procedure of establishment, the development and operation of technological industrial development zones, the activities performed in the technological industrial development zones and the special conditions for their performance, the application of the customs regulations in the technological industrial development zones as well as the termination of operation of the technological industrial development zones and of the user of the technological industrial development zones.

Purpose of the Law
Article 2
The purpose of this Law shall be acceleration of the economic development by attracting foreign and domestic capital for the development of new technologies and their application in the national economy, increasing the competitiveness of the Republic of Macedonia on the foreign trade markets, increasing exports and increasing employment.

Public Interest
Article 3
The construction and performance of the works pertaining to the establishment and operation of the technological industrial development zones shall be of public interest.

Meaning of Used Terms  
Article 4

(1) Certain terms used in this Law shall have the following meaning:

1)  “Tax payer” shall mean a person who pursuant to the Law on Tax Procedure is defined as such;

2) “Tax authority” shall mean a state administrative body which performs administrative and other professional maters laid down in the Law on the Public Revenue Office;

3)  "Domestic goods" shall mean goods:

- Fully obtained in the customs area of the Republic of Macedonia pursuant to Article 22 of the Customs Law, not incorporating goods imported from other countries. The goods obtained from goods placed under suspension procedure shall not be deemed to have the status of domestic goods.

- Imported from other countries and released into free circulation; and

- Obtained or produced in the customs area of the Republic of Macedonia, whether from the goods referred to only in indent 2 or from the goods referred to in indents 1 and 2 of this item;

4) “User of the technological industrial development zone” shall mean any domestic or foreign natural or legal person registered for performing activities pursuant to the Company Law and for the purpose of using the technological industrial development zone has signed an agreement with the founder of the technological industrial development zone The founder of the technological industrial development zone may simultaneously be a user of a technological industrial development zone;

5) “Founder of a technological industrial development zone” shall be the Government of the Republic of Macedonia or a domestic or foreign legal person;

6) “Placing goods for inspection to the customs authority” shall mean a notification to the customs authority, in a prescribed manner, about the arrival of the goods at the customs authority or any other place designated and approved by the customs authority;

7) “Foreign goods” shall be goods different than those referred to item 3 of this paragraph. Domestic goods taken out of the customs area shall obtain the status of foreign goods;

8) “Technological industrial development zone" (hereinafter referred to as: the Zone) shall be a part of the territory of the Republic of Macedonia as part of the customs area, separated from the remaining parts of the customs area, separately fenced and marked area representing a functional entity in which activities are performed under conditions prescribed by this Law and other laws and in which the customs and tax incentives determined by this Law and other laws. The technological industrial development zone shall be created with a view to the development of high propulsive and modern technologies by introducing economically profitable production and efficient use of the resources by application of the highest environmental standards. The technological industrial development zone shall be a free zone from the aspect of the Customs and Tax Laws.

   9) “Customs allowed act or use of goods” shall mean:

      a) Placing goods under a customs procedure;

      b) Entry of goods in a zone or a free warehouse;

      c) Re-export of goods from the customs area;

      d) Destruction of goods; and  

      e) Renouncing of goods to the benefit of the state.

 10) “Customs debt” shall be an obligation of a person to pay the amount of import duties (customs debt on import) or export duties (customs debt on export) prescribed for certain goods according to the regulations of the Republic of Macedonia;

 11) “Customs control" shall mean performance of the specific activities such as: examination of goods; verifying the existence, reliability and accuracy of the documents; examination of accounting books and other records; examination and search of means of transport; examination and search of personal baggage and other goods that persons carry with or on themselves; carrying out official procedures and other similar acts with a view to enforcing customs regulations, and when necessary, other regulations applicable for goods subject to customs supervision;

12) “Customs supervision” shall mean general measures undertaken by the customs authority for the purpose of ensuring implementation of the customs regulations, and when necessary, other regulations applicable for goods subject to customs supervision;

13) “Customs authority" shall be an organisational unit of the Customs Administration laid down by law which is competent for the application of the customs or other regulations where some or all the prescribed formalities may be carried out;  

14) “Customs procedures” shall be:

- Releasing of goods into free circulation;

- Transit;

- Customs warehousing;

- Inward processing;

- Processing under customs control;

- Temporary import;

- Outward processing; and

- Export.

15) “Customs regulations” shall be the Customs Law and bylaws adopted on the basis of this law.

             (2) For the purposes of this Law, the use of singular shall also include plural, while plural may also refer to singular, except when the words “only” or “except” do not exclude plural or singular.

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II. INCENTIVES FOR INVESTING IN THE TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONE

Tax Exemptions and Relieves and Procedures
Article 5

(1) The tax payer, user of the zone shall be eligible for exemptions and relieves from payment of:

1) Profit Tax pursuant to the provisions of the Law on Profit Tax; and

2) Personal Income Tax pursuant to the provisions of the Law on Personal Income Tax Law.

 

            (2) The provisions of the Law on Value Added Tax referring to the free zones shall appropriately apply for the technological industrial development zones.

Customs Exemptions and Relieves
Article 6

            (1) The founder and/or the user of the zone shall be eligible for customs exemptions and relieves pursuant to the provisions of the Customs Law, unless otherwise provided by this Law. 

            (2) The user of the zone carrying out production activities and Information Technology related activities (software development, hardware assembly, digital recording, computer chips, etc.), scientific research activities and production based on new technologies with high environmental standards shall be exempt from the obligation of submitting a guarantee as a security instrument for the customs debt incurring or that may incur after the determination of the customs allowed procedure or use of the goods.

            (3) The exemptions or relieves referred to in paragraph (1) of this Article shall not apply to alcohol and alcoholic beverages, as well as to tobacco and tobacco products.  

            (4) The user of the zone may use the customs exemptions and relieves for foreign goods used as equipment pursuant to Article 42 of this Law.

Article 7
The user of the zone shall realize the exemptions and relieves laid down in Article 5 and 6 of this Law for conducting:

             1) Production activities;

             2) Information Technology related activities (software development, hardware assembly, digital recording, computer chips, etc.), scientific research activities and production based on new technologies with high environmental standards; and

            3) Services directly related to the importation of goods which enter the zone, provided that the goods are not intended for end use.

Other Incentives
Article 8

(1) The user of the zone carrying out any of the activities laid down in Article 7 of this Law, shall also be eligible for the following incentives:

1)   By way of derogation from the provisions of the Law on Construction Land, the founder or users of the zone are exempt from paying a fee for regulation of the construction land;

2)   The fee for regulation of the construction land, of which the users of the zone are exempt, shall be indemnified by the Government of the Republic of Macedonia to the benefit of the local self-government units;

3)   The land in the zone shall be leased to the founder of the zone for a period of up to 50 years with the possibility for a 25 year extension;

4)   The lease period of the land and the amount of rent for the leased land shall be determined by the Government of the Republic of Macedonia on a case to case basis;

5)   By way of derogation from the provisions of the Law on Protection and Rescue, the user of the zone shall be exempt from the obligation to build a shelter during construction of facilities within the zone, as well as from paying a contribution fee for the construction, maintenance and equipping of the shelter;

6)   The Government of the Republic of Macedonian may have a share in the costs for constructions of a construction facility for the user of the zone – companies from the current list of Fortune Global 500 and Business Week Global 1200, of up to 100%, but not more than 500,000 EUR in denar counter-value.

7)    The constructed facility referred to in paragraph (1) item 6 of this Article shall be the ownership of the Republic of Macedonia to the percentage equivalent to the participation of the Government of the Republic of Macedonia in its construction, while the users of the zone shall only use the facility until they use the land, i.e. until they are operating.

(2) The Government of the Republic of Macedonia shall decide on the fulfilment of the conditions referred to in paragraph (1) item 6 of this Article, upon proposal of the Directorate for Technological Industrial Development Zones, within a period that cannot be longer than 30 days from the date of submitting the proposal. 

(3) The user of the zone shall be bound to start construction on the land granted for use within 9 months from the signing of the lease contract, and to finish construction and start production within 30 months at the latest.

            (4) The lease contract for the land may be unilaterally terminated if the lessee of the land does not start construction on the production facility within 9 months from the date of signing the lease contract and if production does not start within 30 months.

Conditions and Procedures for Exercising Tax Exemptions and Relieves
Article 9

(1) The user of the zone shall exercise tax exemptions and relieves if the user:

1)      Makes at least 80% of the annual sales in exports outside of the Republic of Macedonia;

2)      Performs a new activity, but does not transfer the activity from another area of the Republic of Macedonia into the zone;

3)      Has no unsettled levied tax or customs obligations; and

4)      Is not under a bankruptcy procedure.

(2) The value of the goods and services produced i.e. performed in the zone shall be determined on the basis of invoices and other documents issued by the user of the zone.

(3) The value of the performed export of goods and services shall be determined on the basis of export customs declarations. The user of the zone is obliged to submit the export customs declaration to the Directorate for Technological Industrial Development Zones.

(4) For the purpose of exercising tax exemptions and relieves referred to in Article 5 paragraphs 1) and 2) from this Law, the user of the zone shall submit a tax return to the competent tax authority through the Directorate for Technological Industrial Development Zones.

(5) Pursuant to paragraph (4) of this Article, the user of the zone shall attach to the tax return:

1) The contract for performing activity with the founder of the zone;

2) The decision referred to in Article 29 paragraph (4), or the decision referred to in Article 31 paragraph (1) of this Law;

3) The income statement for the previous year, except for legal subjects established during the current year;

                  4) Proof from a competent authority that the user is registered for performing business activities;

                 5) Certificate issued by a competent authority that the user of the zone has no levied and unsettled tax or customs obligations;

                  6) Certificate issued by a competent court that the user is not under a bankruptcy procedure.

(6) The proof referred to in items 1), 2) and 4) of paragraph (5) of this Article shall be submitted within 15 days after receiving the decision to commence operation from the Directorate for Technological Industrial Development Zones, with a view to entering the user into the Register of Tax Incentive Users.  

(7) The proof referred to in items 3), 5) and 6) of paragraph (5) of this Article shall be submitted each year of the operation in the zone, by 31 March of the current year at the latest.

            (8) If the conditions of this Article have been met, the tax authority shall issue the user an act for an appropriate tax exemption and relief and it shall also submit it to the Directorate for Technological Industrial Development Zones within 8 days of its adoption.

 

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III. CONDITIONS AND MANNER OF ESTABLISHING A TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONE

General Conditions of Establishing a Technological Industrial Development Zone
Article 10

(1) The Zone shall be established if:

1) The spatial, energetic, technical and other conditions prescribed for performing activities in the zone are provided;

2) Manufacturing technological processes, production and storage of goods, i.e. providing services that are harmful to the environment and to the nature are not performed;

3) The founder of the zone provides the required initial capital for establishing the zone.

(2) The conditions for establishing the zone referred to in paragraph (1) item 1) of the Article up to the borders of the zone shall be provided by the Government of the Republic of Macedonia.

(3) The founder of the zone shall provide the funds for establishing and commencing operation of the zone, as well as appropriate spatial, environmental, energetic, technical and other conditions for performing activities in the zone and shall adopt its act of establishment.

           (4) The founder of the zone, except when the founder is the Government of the Republic of Macedonia, shall register a trade company performing economic, technical, administrative and other affairs related to the performing of activities in the zone.

Spatial Conditions for Establishing a Technological Industrial Development Zone
Article 11

(1) The Zone shall be established on an area designated by a spatial plan or an urban plan of land owned by the Republic of Macedonia as a site of public interest. The zone may be established inside or outside of an urban area.  

            (2) The zone may consist of several separate parts of the territory of the Republic of Macedonia, each of which constitute an economic and functional entity and each shall be fenced and marked.

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IV. DIRECTORATE FOR TECHNOLOGICAL INDUSTRIAL DEVELOPMENT ZONES

Competences of the Directorate for Technological Industrial Development Zones
Article 12

(1) The activities related to the establishing, development and monitoring of the zones shall be carried out by the Directorate for Technological Industrial Development Zones (hereinafter referred to as: the Directorate).

(2) The Directorate shall perform the following activities:

1) Planning and development of the zones and providing conditions for utilisation of the area;

2) Issue approvals for establishing zones;

3) Promotion and advertising of the zones and public relations;

4) Attract founders and users of the zone;

5) Keep records of the activities of the area of the zone;

6) Adopt decisions for commencement of operation by the user of the zone;

7) Adopt decisions for termination of the decision for operation;

8) Adopt a tariff on fees for services provided by the founder and a tariff on fees for services provided by the user, on which the Government of the Republic of  Macedonia shall give its consent. The fee amounts shall be determined depending on the amounts of incurred expenses.

9) Establish co-operation with the state administrative bodies, public enterprises and trade companies related to the zone and thereby ensure:

- Consents, approvals, permits, or more precisely certificates determined by special legal requirements for the establishing, commencement of operation and operation of the zone;

- Supervision over the functioning of the infrastructure in the zone;

- Protection of public safety and safety of the persons and property in the area of the zone; and

- Protection from illicit trade.

    10) Approve the Act referred to in Article 34 of this Law;

                11) Monitor the operation of the zone and when necessary propose measures to the Government of the Republic of Macedonia;

                12) Keep records of all the leasing and subleasing contracts between the founder and the users, provided by the founder of the zone;  

                13) Perform all affairs, other than those that require the founder and/or the user to have a prior permit, consent or approval by a competent authority pursuant to law; and

14) Perform all other activities related to the functioning of the zone.

            (3) The Directorate shall have legal personality.

            (4) Where the Government of the Republic of Macedonia is the founder of the zone, the Directorate shall perform the activities within the competences of the founder of the zone, on behalf of the founder


Article 13

(1) For the purpose of implementing the activities within its competence, the Directorate shall adopt an annual programme and financial plan, for which the Government of the Republic of Macedonia shall give its consent.

(2) The Directorate shall submit the annual programme and financial plan for the following year referred to in paragraph (1) of this Article to the Government of the Republic of Macedonia by 30 November of the current year at the latest.

            (3) By the end of May of the current year, the Directorate shall prepare a report on the operation of the zone in the previous year and shall submit it to the Government of the Republic of Macedonia for adoption.

Director of the Directorate
Article 14

(1) The Directorate shall be managed by a Director who shall be appointed and dismissed by the Government of the Republic of Macedonia.

(2) A person meeting the following conditions may be appointed as a Director:

      - To have university degree at least,

      - To have at least five-year working experience,

      - To have at least three-year working experience at a managerial post,

      - To have active use of the English language and

        - To have experience in cooperation with international organisations and institutions.

 

            (3) The Director shall be appointed to a term of four years.


Article 15
The Director of the Directorate shall perform the following activities:

    - Represent and advocate the Directorate;

    - Organise the work and manage the professional units of the Directorate;

    - Execute the decisions of the Steering Committee;

    - Ensure the legal operation regarding the competences laid down in Article 12 of this Law;

    - Harmonise the business activities of the Directorate;

    -  Prepare the annual programme and financial plan of the Directorate;

    -  Prepare reports on the operation of the zone in the previous year;

    - Propose to the Steering Committee and implement the general acts of the organisation and systematisation of the work of the Directorate;

    -    Adopt single acts for the employees in the field of labour relations; and

    -   Decide on other issues regulated by this Law and the Statute of the Directorate.


Article 16

(1) Each six months, the Director shall be bound to submit a report on the work of the Directorate to the Government of the Republic of Macedonia.  

(2) In the report referred to in paragraph (1) of this Article, the Director shall be bound to provide data on the type and scope of the work performed while performing the duties of the Directorate.  

            (3) When the report of the work of the Directorate shall establish deficiencies and/or loss in the financial operations of the Directorate, the Director shall be bound to eliminate them in the following six months.


Article 17
The Director of the Directorate shall be dismissed before the expiry of the term in the following cases:

   - At his/her request;

   - If s/he fails to work and act according to the Law, Statute and the Acts of the Directorate or unjustifiably fails to implement the decisions of the Steering Committee or acts contrary to them;

   -If by negligence or misconduct, the Director causes disturbances in the performing the activities of the Directorate and causes damages;

   -If s/he neglects or fails to perform the duties thereby causing disturbances in performing the activities of the Directorate of public interest;