From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Sun Apr 19 2009 - 17:16:40 EDT
Non-Aligned Movement (NAM) Monday April 20, 2009
Eritrea INVESTMENT POLICY
Introduction
Eritrea welcomes and encourges foreign investment. It is situated in
northern East Africa. It is bordered by Sudan in the west, Ethiopia in
the south, and Djibouti in the southeast. The east and northeast of the
country have an extensive coastline on the Red Sea, directly across from
Saudi Arabia and Yemen. The Dahlak Archipelago and several of the Hanish
Islands are part of Eritrea. Eritrea was consolidated into a colony by
the Italian government on January 1, 1890. The modern state of Eritrea
gained its independence from Ethiopia following a 30-year war that
lasted from 1961 to 1991. The National Assembly of 150 seats formed in
1993 shortly after independence.
Eritrea's constitution adopted in 1997 stipulates that the state is a
presidential republic with a unicameral parliamentary democracy. Eritrea
is a multilingual and multicultural country with two dominant religions
(Sunni Islam and Oriental Orthodox Christianity) and nine ethnic groups.
The country has no official language, but it has three working
languages: Tigrinya, Arabic and English
Regions of Eritrea is divided into six regions (zobas) and subdivided
into districts ("sub-zobas"). The geographical extent of the regions is
based on their respective hydrological properties. This dual intent on
the part of the Eritrean government: to provide each administration with
sufficient control over its agricultural capacity and eliminate
historical intra-regional conflicts.
Eritrea is located in East Africa, more specifically the Horn of Africa,
and is bordered on the northeast and east by the Red Sea. The country is
virtually bisected by one of the world's longest mountain ranges, the
Great Rift Valley, with fertile lands to the west and the descent to
desert in the East.
The 1 347 km (837 mile) coastline, along with another 1 946 km
(1,209-miles) of coast around its more than 350 islands, will come under
governmental protection. The main cities of the country are the capital
city of Asmara and the port town of Asseb in the southeast, as well as
the towns of Massawa to the east, and Keren to the north.
Information on Foreign Investment
Economy of Eritrea
Like the economies of many other African nations, the economy is largely
based on agriculture, with 80% of the population involved in farming and
herding. The government of Eritrea has also undertaken efforts to
develop and improve its transportation infrastructure, asphalting new
roads, improving its ports, and repairing war-damaged roads and bridges
as a part of the Warsay Yika'alo Program. The most significant of these
projects has been the building of a coastal highway of more than 500 km
connecting Massawa with Asseb as well as the improvement of the Eritrean
Railway. The rail line now runs between the Port of Massawa and the
capital Asmara.
Extract from UNCTAD/WTO International Trade Centre website.
Meanwhile this website in its African Platform Home section comes out
with a lot of information on Eritrea which are useful to foreign
investors.
Eritrea: Investment Environment
Requirements For Foreign Investment / Joint ventures:
The policy principles in regard to the promotion of investments:
*Private investment, both local and foreign, is allowed to participate
in all sectors of the economy with no restrictions and discrimination.
*The government is taking all necessary policy and other supportive
measures to promote, encourage and develop the private sector and
protect its interests.
Domestic capital and foreign direct investment (FDI)
* Domestic capital and FDI are given equal opportunity.
* FDI is welcome with open and equal access to the economy available to
the local investor. All sectors of the economy are open to foreign
investors.
*A favourable investment atmosphere encourages inflow of FDI.
*Foreign capital may establish an enterprise on its own and/or in
partnership with local capital.
Tax Incentives:
Duties and taxes levied on imports and exports
* Capital goods, intermediates, industrial spare parts and raw
materials pay a nominal customs duty of 2%.
* Raw materials and intermediate inputs shall be subject to 5% sales
tax.
* However, all sales tax on all materials and inputs that have been used
for export production will be rebated.
* Exports are exempted from export duties and sales taxes.
Income Tax
The marginal tax rates range, as follows:
* On personal income from 2%-30%
* On non-corporate profit 2%-30%
* On corporate profit, flat rate of 30%
* On rent income from 2%-30%
* Profit derived from mining activities will be taxed as per the mining
legislation (proclamation No 69/1995)
* There shall be no taxes on declared dividends.
*Any net loss incurred in one year may be set off against taxable
business income in the next five years, earlier losses being set off
before later losses.
Free Trade Zones:
In an attempt to boost export by creating conducive investment
environment, at the time of the review, the government has enacted
proclamation NO 115/2001 with provisions that permit to establish free
zones in Eritrea.
Some articles of the proclamation are as follows:
Article 24: Granting of Licenses
The Authority may grant or refuse to grant to any person:
a) a license to develop and/or manage a free zone; or
b) a license for trading or engaging in industrial or storage or other
activities.
Article 25: Application for a license
1.Any person may apply to the authority for:
a) a developer's license; and/or
b) a license for trading or engaging in industrial or storage or other
activities
2. Each application shall
a) be in writing
b) addressed to the authority
c) specify the free zone to which the application relates
d) be supported by information required and prepared in special forms.
3. In deciding whether to grant or refuse a license, the authority shall
have regard to the extent to which the proposed activity will contribute
to:
a) the growth of employment and exports;
b) the development of worker skills & technology;
c) the development of the surrounding region; and
d) other priority government objectives;
4. If the project is industrial, the applicant should explain by simple
statement approximately the quantities to be imported as raw material,
the final products, his or her requirements for water, electricity, gas
and labour.
5. For any license the applicant shall pay all the requisite fees to the
authority.
Import and export of goods:
1. Free zones established under this proclamation shall operate under
customs control pursuant to the customs proclamation (proclamation
112/2000) and free zone customs regulations issued by the minister under
article 60 (1) of the customs proclamation.
2. The investors may import or export all kinds of goods, except the
prohibited items, without payment of any customs duties or taxes
provided all customs procedures are observed.
3. Goods imported into and exported from a free zone shall, pursuant to
article 60(2) of the customs proclamation, be exempted from all import
and export licensing requirements and other restrictions other than
those imposed on grounds of public morality or order, public hygiene or
health, or relating to the protection of patients, trademarks, copy
rights, and other intellectual property.
Article 31: Tax exemption
1. Persons with a free zone developer's license granted under article 24
shall be granted exemption from the payment of any or all taxes,
including income tax from personal income, profit, income from rent,
sales tax, service tax, excise tax, stamps duty, tax dividends and with
holding taxes for a period of 15 years from date of issue of the
license.
2. Any investor engaged in trading or industry or storage or other
activities in the free zone may not pay any tax including taxes for his
or her profit or bank interest from accounts or bank business documents
or shares.
Article 32: Repatriation of income and profit
Foreign investors may repatriate income and profits arising from
activities in a free zone permitted in any license without restriction.
Article 33: Settlement of investment disputes
1. Investment disputes that arise in a free zone can be settled in a
manner agreed between the parties in the dispute, or if there is an
agreement between Eritrea and the home country of the other party, by
that agreement, or by using the International Convention for the
settlement of Investment Disputes (ICSID) or by arbitration.
2. An arbitration tribunal shall consist of two arbitrators appointed by
the two arbitrators failing to agree on the nomination of a third member
within 15 days, the matter shall be refereed to the chief Executive of
the authority who shall appoint the chairperson of the Arbitration
Tribunal.
Article 34: The operation of foreign currency accounts
1.Persons holding a free zone license issued under article 24 shall be
permitted to operate a foreign currency account with a bank in Eritrea.
2. Investors are permitted to deal in all currencies to transfer,
receive, pay open letter of credit and engage in all types of bank
activity without any restriction.
3. The Authority shall consult the Bank of Eritrea about the terms and
conditions referred to sub-article (2) of this article.
4. The Bank of Eritrea shall supervise the operation of the foreign
currency accounts. It shall be empowered to request any information it
considers necessary from the account holder or concerned bank.
http://www.namnewsnetwork.org/v2/invest2.php?id=95
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