on establishing of the General Authority for Free Zones
The General People’s Committee,
Upon review of:
Chapter (1)
The following words and expressions shall have the meanings set out next to each, unless indicated otherwise by the context:
Establishment of the General Authority for Free Zones
Pursuant to this Decree, a general authority called the “General Authority for Free Zones” shall be established, affiliated to the General People’s Committee for Economy and Commerce. The Authority shall be a legal entity with financial autonomy. The Authority’s main headquarters shall be in the city of Misrata, and the Authority may establish branches at any location inside the Great Jamahiriya.
The Authority shall manage the zones established under a decree from the Secretary of the General People’s Committee for Economy and Trade, in accordance with Law No. (10) of 1959 AD, taking into consideration the systems established by the Customs Authority for the entry and exit of goods, the registration thereof, the examination of documents, and the monitoring and guarding of free zones.
The Authority shall have the right to supervise the activities established in the free zones and work to improve commercial, industrial, and service activity therein in the interest of the national economy, as well as those desiring to engage in commercial, industrial, and service activities therein. In doing such, it may assume the following duties in particular:
The Authority shall have an administrative board formed as follows:
The Authority’s administrative board shall handle the affairs of the free zones and supervise the activities thereof and shall have the broadest powers and competencies necessary for such, in particular:
The administrative board may form one or more committees from its members and entrust them with certain competencies. It may also entrust certain competencies to the board secretary or one of the board’s members.
The Authority’s bylaws shall be issued under a decree from the Secretary of the General People’s Committee for Economy and Commerce.
Article (8)
The administrative board shall formulate internal regulations setting out its work method and manner of holding its meetings.
The Authority shall have a general director appointed to the position under a decree from the General People’s Committee based on a submission from the secretary.
The Authority’s general director shall assume the following duties and powers:
The following activities may be performed in the free zones:
Article (12)
Based on a submission from the Authority’s general director, the general director of the Customs Authority shall issue licenses to establish export, commercial, or financial industrial projects and to store and prepare goods. He shall also permit the exercise of trades required by the activities inside the free zone and the export of services, provided such is approved by the secretary. In all cases, the licenses must include a statement of the license objectives and term.
The administrative board shall establish detailed rules on the requirements for investing in economic activities licensed in the free zones, as well as the standards that must be observed when engaging in such activities.
Free zone investors must perform the following:
Licenses may be withdrawn under a decree from the general director of the Customs Authority based on a submission from the Authority’s general director in the following circumstances:
In all cases, these decrees must be approved by the secretary.
Investors may file grievances against administrative measures taken against them, provided the grievance request is submitted to the administrative board within thirty days from the date the party filing the grievance was notified of the decision issued against them.
The committee shall forward the grievance accompanied by its opinion to the secretary within two weeks from the date the grievance in question was submitted.
In all cases, the secretary’s decision on the grievance shall be final.
Without prejudice to the legislation in force criminalising or prohibiting the trade of certain goods, goods imported to or exported from a free zone shall not be subject to any restriction in terms of the period in which they remain there. They shall also not be subject to any customs duties and taxes or import and export regulations and procedures thereof. Projects shall be allowed to export their products without restrictions and without being required to enter them in the exporters register.
They shall also not be subject to any fees or taxes with the exception of the fees for the services provided thereto.
All tools, machinery, instruments, materials, stationary, furniture, and transportation required for the authorised facilities in the free zones shall be exempt from customs and other taxes.
Customs fees and taxes shall be paid on goods withdrawn from free zones for local consumption as if they were imported from abroad, in accordance with their status post-manufacturing, without prejudice to the procedures regulating imports and monetary oversight. These taxes and fees shall be paid on goods that contain local components according to the percentage of foreign components used in the manufacturing thereof based on the value of such components.
Under a decision from the general director, products not suitable for export produced by manufacturing operations in the free zone may be brought in, provided the set customs taxes and fees are paid thereon.
In all cases, goods withdrawn from the free zone for local consumption shall be subject to health and agricultural quarantine procedures.
Industrial investment projects and other commercial investment projects and services permitted in the free zones and the profits thereof shall enjoy the exemptions and benefits set out in the aforementioned Law No. (5) of 1426 FBP on encouraging the investment of foreign capital, in particular:
Profits from the project’s activity shall also enjoy these exemptions if they are reinvested, and investors shall be entitled to carry over losses sustained by the project during the exemption years to subsequent years.
Projects established in the free zones may not be nationalised, expropriated, subjected to compulsory appropriation, seized, placed under sequestration or custody, frozen, or subjected to any action with the same effect except under law or judicial order and in return for immediate and just compensation provided such just measures are adopted when the measure is adopted. Compensation may be transferred in convertible currencies within a period of not more than one year at the prevailing exchange rate at the time of the transfer.
Movement of funds between the free zone and outside the Great Jamahiriya, including entry, exit, storage, goods and materials manufacturing operations, and monetary operations within the zone shall not be subject to any monetary oversight regulations or restrictions, whether such operations take place between national or international investors.
Capital invested in the free zone and profits resulting therefrom may be transferred outside the Great Jamahiriya in accordance with Article (12) of the aforementioned Law No. (5) of 1426 FBP and the implementing regulations thereof.
Projects established in the free zone shall not be subject to registration procedures at the commercial registry or the registry of importers and exporters.
The Authority shall issue regulations on the procedures for registering therewith.
License holders shall pay an allowance to the Authority in consideration for the services they officially receive not to exceed 1% of the value of the goods brought into or out of the free zone for the project. Such fee shall be specified under a decree issued by the administrative board. Transit goods trade shall be subject to half of this fee.
In accordance with this Decree, licensees shall insure the buildings and equipment they use against all risks and shall remove such at their personal expense within the period specified by the Authority from the date the license term ends, unless the Authority decides to purchase such from them.
Project ownership may be transferred, in whole or in part, to another investor with the written agreement of the Authority and under the terms and conditions specified by the administrative board.
The new owner shall replace the previous owner in terms of rights, duties, and obligations ensuing under this Decree and the other legislation in force.
The Authority’s Financial System
Article (27)
The Authority’s fiscal year shall commence with the start of the State’s fiscal year and end at the end thereof. The Authority’s first fiscal year shall commence from the date this Decree enters into force and end at the end of the following fiscal year.
Article (28)
The Authority shall have an estimated budget prepared at least three months prior to the beginning of the fiscal year.
The Authority’s financial regulations shall set out the procedures for preparing this budget as well as the terms and conditions related to its preparation, approval, and implementation.
The Authority’s financial resources shall consist of:
The People’s Oversight Authority shall inspect and audit the Authority in accordance with the law.
The Authority shall have bank accounts at commercial banks operating in the Great Jamahiriya, into which its funds shall be deposited in local and foreign currencies, as needed.
A banking system in local and foreign currencies shall be established in the free zones, contributing to the financing of various activities and providing all banking services required by the nature of the commercial, industrial, and service activities inside the zone, in accordance with the law. Licensees shall open bank accounts in accordance with this system.
The legislation in force in the Great Jamahiriya shall apply to free zones, and the Social Insurance Law applicable to workers in the Great Jamahiriya shall apply to Libyan workers in free zones. All laws in force on protecting commercial, industrial, literary, and technical property shall apply.
The board shall establish the executive rules necessary to apply the aforementioned provisions, in coordination with the competent bodies.
The Secretary of the General People’s Committee for Economy and Trade shall issue the decrees regulating establishing companies and opening branches of foreign companies in the free zones, in line with the nature of these zones.
The Authority shall commence its activities by managing the free zone adjacent to the Misrata Sea Port. This zone shall be established under a decree from the secretary. All facilities, real estate, storage yards, and equipment in this zone and in any zone declared to be a free zone shall be transferred to the Authority in accordance with the arrangements adopted for this purpose.
The Authority may agree with investors or third parties to resolve any disputes that may arise between them through commercial arbitration.
National and foreign ships that enter the free zone for the purposes of work may obtain all navigational services required for the ships, be supplied with all marine equipment needed, and provided with food, fuel, oil and other materials requires. The Authority may suspend such services if it finds that they are used in an incorrect manner.
Residing in the free zone shall be prohibited except by special license from the general director of the Customs Authority, based on a submission from the Authority’s general director, in accordance with the requirements imposed by the work, and specifying the lease value of the administrative buildings and the buildings allocated for temporary residence inside the free zone in accordance with the investment rules.
This Decree shall enter into force on the date of its issue and shall be published in the Official Gazette.
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