SPECIAT ISSI'E

Kentv Gozette Supplenunt No. 18 (Natiotu.l Assembly Bills No.6)

-*".$**r"s$

+PI$&3,-REPI.JBLIC OF KENYA

KENYA CAZETTE SUPPLEMENT

NATTONAL ASSEHBLY B|LLS, 2O1s

NAIROBI, 17th f,'ebruery, 2015

CONTENT

Bill for Intnoduction ino tre National Assembly-

PAGE

Tb Special Economic Zones Bill, 2015............. .............59

NECEIVED.0 t DIAR 2015

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THE SPECTAL ECONOMTC Zr()ltES BrLL, 2015

ARRANGEMENT OT' CLAUSES

Clause

PART I-PRELIIVilNARY

l-Short title and commencement.

2-lnterpretation.

3-Object and purpose of Act.

PART II-TIIE SPECIAL ECONOMIC ZONES

4-Declaration of special economic zones.

S-Criteria for designating special economic zones.

6-Goods to be considered as exported and importedinto Kenya.

7-Goods and services within a special economic zone.

8-Removal of goods from a special economic zone.

9-Receipts and payments of special economic zoneenterprises.

PART Itr-TIIE SPECIAL ECONOMIC ZONESAUTHORITY

1 0-Establishment of the Authority.

1l-Functions of the Authority.

l2-Board of Directors.

l3-Conduct of business and affairs of the Board.

l4-Powers of the Board.

I S-Remuneration of Directors.

I 6-Chief Executive Officer.

I 7-Staff of the Authority.

l8-Delegation by the Authority.

I 9-Protection from personal liability.

20-Common seal.

The Specbl Ecorcmic Ztnes Bill,2015

PART IV-FINAIYCIAL PROVISIONS

2l-Establishment of the Fund.

22- Financial year.

23-Annusl Estimates.

24-Acoounts and Audit.

25-Investuent of fimds.

PART V-REGULATORY PROVISIONS

26-Licence to operate in special economic zones.

27-Application and issue of lioence.

28- Qualifications of a special economio zonedeveloper md opemtor.

29-Special economic zone euterprises.

30-Register of licences.

PART VI-RIGHTS AT{D OBLIGATIONS OI'TIIESPECIAL ECONOIUIC ZOIYE ENIITIES

3l-Authority to give notioe to the Kenya RevenueAuthority.

32-Facilities within a special economic zone.

33-Rights of a special economic zone developer oroperator.

34-Rights of a special economic zone enterprise.

35-Benefib accruing to a special economic zoneenterprise.

PART VI-MISCELLANEOUS PROVISIONS

36- Powers of the Cabinet Secretary.

3 7-Dispute Resolution.

38-Exemption from stamp duty.

39-Regulations.

SCHEDTILE_PROVISIONS AS TO TIIE CONDUCT OFBUSINESS AI\D AT'FAIRS OF TEEBOARI)

The Special Economic bnes Bill,2015 6l

TrrE SPECIAL ECONOIWC ZONES BILL, 2015

A Blll for

AN ACT of Parliament to provlde for theestab[shment of specld economlc zoneo; thepromotlon and faellltatlon of global and locallnvestors; the development and manageme-nt ofenabllng envlronment for such lnvesfucnts andfor connected purposes

ENACTED by the Parliamont of Kenya, as follows-PART I.PRELIMINAR,Y

1. This Act may be cited as the Special EconomicZones Act, 2015 and shall come into operation upon theexplry of ninety days from the darc of its publication.

2. In this Act, unless the context othennise requires-

"Authority" means the Special Economic ZonesAuthority established under section 10;

"Board" means the Board of Directors of theAuthority established under section 12;

"business processing outsourcing" means theprovision of outsourcing services to business for specificbusiness functions or processes such as back office supportsenrices in human resources, finance, accounting andprocurcment amongst other services;

"business serrice park" means a special economiczone declared as such under soction 4 to facilitate theprovision of services including but not limited to rcgionalheadquarters, business processing outsourcing cenEes, callcenhes, shared senice cenfres, management consulting andadvisory senices and other associated services;

"business service permit" means an administrativegrant of authority to operate senices within a specialeconomic zone for which no benefits accruing under thisAct are granted;

"Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for matters relating toindustrialization;

"company" has the meaning assigned to it by section 2of the Companies Act and includes a company

Short tith radoo6nac6mt

IlEtpc0don,

The Special Econornic bnes Bill, 2015

incorporated outside Kenya but registered in Kenya underthat Act;

"customs control" means the measures applied toensure compliance with the laws and regulations under theEast African Community Customs Management Act,ZOfJ4;

'customs controlled area" means the specialeconomic zone where certain enterprises carry out customscontolled operations;

"customs territory" means the geographical area of theRepublic of Kenya, but does not include a specialeconomic zone;

"duty" means the cess, levy, imposition, tax or surtax,imposed by any Act;

"export" means to take or cause to be taken out of thecustoms territory or into a special economic zonei

"export duties" means customs duties and othercharges having an effect equivalent to customs dutiespayable on the exportation of goods;

"Freeport zone" means a designated area placed at thedisposal of the special economic zone or freeport authoritywhere goods introduced into the designated area aregenerally regarded, in so far as import duties areconcerned, as being outside the customs territory;

*free frade zone" means a special economic zonecustoms controlled area where goods are off-loaded fortranshipment, storage and may include bulk breaking,repacking, sorting, mixing, trading or other forms ofhandling excluding manufacttring and processing;

"Fund" means the General Fund established undersection 21;

"goods" include all kinds of wares, articles,merchandise, animals, matter, baggage, stores, materials,currency and includes postal items other than personalcorrespondence and where any such

goods are sold under this Act, the proceeds of suchsale;

"import" means to bring or cause to be brought intothe special economic z.onre;

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The Special Economic bnes Bill, 2015 63

"import duties" means any customs duties and othercharges of equivalent effect levied on imported goods;

"industrial park" means a special economic zonedeclared as such under section 4 with integratedinfiastructure to facilitate the needs of manufacturing andprocessing industries ;

"information communication technology park" meansa special economic zone declared as such under section 4 tofacilitate the information communication technologysector, its services and associated activities;

"infrastructure" means roads, power, water, drainage,telecommunication, sanitation or water treatment plants,networks, buildings or other facilities, necessary for thedevelopment and operations of special economic zones andappropriate to their particular sector or cluster focus;

"Kenya Revenue Authority" means the Authorityestablished by section 3 of the Kenya Revenue AuthorityAct;

"licence" means a licence issued under this Act;

"manufacfire" means to make, produce, fabricate,assemble, process or bring into existence by manual,mechanical, chemical or biochemical methods into a newproduct having a distinctive name, character or use andincludes processes such as refrigeration, cutting, polishing,blending, beneficiation, re-making and re-engineering;

"negative list" means a list of activities not allowedto be undertaken by special economic zone enterprisesunder the laws of Kenya and those of the East AfricanCommunity;

"proper officer" means any officer whose right or dutyis to perforrr or require the perforrrance of the acts refenedto in the East African Community Customs ManagementAct,200,4;

"regional headquarters" means a special economiczone enterprise engaged in headquarters managementactivities to oversoe, manage and confrol their local,regional and global operations by providing managerial,supervisory, shared services centre and other supportservices to affiliate companies;

g The Specbl Economic hnes Bill, 2015

"science and technology park" means a specialeconomic z.one declared as such under section 4 tofacittate the science and technology sector, its services andits associated activities;

"services" means tradable services which are coveredunder the General Agreement on Trade in Services annexedas 1B to the Agreement establishing the World TradeOrganisation concluded at Marrakesh on the 15th day ofApril, 1994, and any successor agreements or amendmentsthereto;

"special economic zone" means a zone declared assuch under section 4;

"special economic zone enterprise" means a corporatebody which has been licensed under this Act;

"special economic zone developer" means a corporatebody which is engaged in or plans on developing, andwhich may or may not also operate or plan to operate, aspecial economic zone under this Act;

"special economic zones operator" means a corporatebody engaged in the management of a special economiczone and designated as such under the provisions of thisAct; and

"tourist and recreation centre" means a specialeconomic ?rllrrc declared as such under section 4 tofacilitate tourism and recreation sector, lts services andassociated activities.

3. The object and purpose of this Act is to providefor-

(a) an enabling environment for the development ofall aspects of special economic zones including-(i) development of integrated infrastructure

facilities;

(ii) creation of incentives for economic andbusiness activities in areas designated asspecial economic zones;

(iii)removal of impediments to economic orbusiness activities that generate profit forenterprises in areas designated as specialeconomic zones; and

Objcot and puposeofAct.

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(b) the regulation and administration of activitieswithin the special economic zones with due regardto the principles of openness, competitiveness andtransparency.

PART tr-THE SPECIAL ECONOMIC ZONBS

4, (l) The Cabinet Secretary may, on therecornmendation of the Authority, and in consultation withthe Cabinet Secretary responsible for matters relating tofinance declare, by notice in the Gazntle, any area ,rs aspecial economic zone.

(2) A declaration of a special economic zone undersubsection (1) shall-

(a) define the limits of the zone; and

(b) remain in force until revoked by an order in theGazette by the Cabinet Secretary and on therecommendation of the Authority.

(3) Where upon receipt of a recorlmendation undersubsection (1), the Cabinet Secretary considers thatgazettement of a special economic zone would infringeupon the public interest, the Cabinet Secretary may referthe recommended back to the Auttrority to ensure theprotection of that public interest.

(4) A special economic zone shall be a designatedgeographical area where business enabling policies,integrated land uses and sector-appropriate on-site and off-site infrastructure and utilities shall be provided, or whichhas the potential to be developed, whether on a public,private or public-private parfirership basis, where anygoods introduced and specified services provided areregarded, in so far as import duties and taxes areconcerned, as being outside the customs territory andwherein the benefits provided under this Act apply.

(5) Any public land declared as a special economiczone shall not be alienated for private use excep to specialeconomic zone developers, operators or enterprises or otherbodies established within a special economic zone.

5. The Authority shall, in designating and determiningthe special economic zone project proposals that qualify forlicensing, take into account the following considerations asmay be appropriate-

Declaration ofspccial economiozotres.

Criteria fordesigaatiog spccialeconomic mneg.

66 The Special Economic Tnnes Bill,2015

(a) nature of the proposed project;

(b) intended size and perimeter of the proposedspecial economic zone1,

(c) availability of land and unencumbered land titles;

(d) geographical location and topography;

(e) proximity to resources, population centres andinfrastructure;

(f) infrastructure and other utility requirements fromnational and county governments including water,power, sewage, telecommunication, solid wasteand waste water management;

(g) provision of medical, recreational, security firesafety, customs, and administrative facilities;

(h) impact on off-site infrastructure, utilities andservices;

(i) approvals of land uses and zoning requirements tofacilitate the special economic zones;

O environmental standards and requirements; and

(k) any other criteria as may be prescribed by theAuthority

6. Unless otherwise provided under this Act, or anyother written law-

(a) goods which are taken out from any part of thecustoms territory and brought into the specialeconomic zone or services provided from part ofthe customs territory to a special economic zoneshall be deemed to have been exported fromKenya; and

(b) goods which are brought out of a special economiczone and taken into any part of the customsterritory for use therein or services provided froma special economic zone to any part of the customsterritory shall be deemed to be imported intoKenya.

7. Subject to section 6-(a) goods and services within a special economic

zone, which shall constitute a customs contolledarea, shall not be taken out of the zone except-

Goods to beconsidered as beexported andimported intoKenya.

Goods and ecrvictswithin a specialeconomic zouc.

The Special Economic Zones Bill,2015 67

(i) for export;

(ii) for entry into the customs territory, subject tothe regulations and procedures on customs;

(iii) for removal to any other customs controlledarea with the approval of the proper officers;or

(iv) for repair and maintenance or processing orconversion with prior approval of the properofficer and subject to any conditions as maybe imposed;

(b) where goods are manufactured outside Kenya,such goods shall be clearly labelled as products ofthe country where such goods were manufactured;

(c) services provided by a special economic zoneenterprise may be provided to-(i) persons outside Kenya;

(ii) other special economic zone enterprises infurtherance of the export activities of suchenterprises subject to approval of theAuthority; or

(iii) persons in the customs territory subject toapproval of the Authority.

8. (1) Subject to this Act as well as applicable customslaws, goods within a special economic zone may be-

(a) stored, sold, exhibited, broken up, repackaged,assembled, distributed, sorted, graded, cleaned,mixed, or otherwise manipulated or manufacturedin accordance with the provisions of this Act; or

(b) destroyed under the supervision of the properofficer; or

(c) removed, under the supervision of the properofficer from the special economic zone for exportor sent into another special economic zone orbonded factory, either in its original package orotherwise.

(2) Subject to this Act, goods of any description whichwould be used in the activities of a licensed specialeconomic zone enterprise may be brought into a specialeconomic zone.

Removal ofgoodsftom aspecialeomicrcne.

, The Special Economic Tanes Bill, 2015

(3) A person who contravenes this section commits anoffence and is liable to a fine not exceeding twenty millionshillings or imprisonment for a tenn not exceeding threeyears or both and the goods shall be forfeited under theEast African Community Customs Management Act.

(4) The special economic zone enterprise shall alsooperate in conformity with the specific regulations issuedunder the relevant provisions of the East AfricanCommunity Customs Management Act.

9. Unless otherwise provided under this Act or anyother applicable law, payments and receipt of funds by aspecial economic zone enterprise shall be subject to theprovisions of the Central Bank of Kenya Act and theBanking Act.

PART Itr-THE SPECIAL ECONOMIC ZONES' ATIIIIORIIY10. (1) There is established a body to be known as the

Special Economic Zones Authority.

(2) The shall be a body corporate, withperpetual succession and a common seal, and shall, in itscorporate name, be capable of-

(a) suing and being sued;

(b) purchasing or otherwise acquiring, holding,charging and disposing of movable andimmovable property in and out of Kenya;

(c) entering into confracts;

(d) borrowing orreceiving money including having itsown Fund; and

(e) doing or causing to be done or performing all suchthings or acts for the proper performance of itsfunctions under this Act, as may be lawfully doneor performed by a corporate body.

11. The functions of the Authority shall be to-(a) make recorrmendations to the Cabinet Secretary

on all aspects of designation, approval,establishment, operation and regulation of specialeconomic zones;

(b) implement the policies and programmes of theGovernment with regard to special economiczones;

Rlceipts.ndpaymeabof specialocoamic zonemtrrpriroo.Cap.49lCap.488

Eetablishmeot of thcAuthority.

Punonoar ofltrcAulhorl0.

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The Special Economic Tnnes Bill, 2015 69

(c) identify, Dap and, where necessary, procure oravail to developers and operators the areas of land ,

to be, or which have been, designated as specialeconomic zotres;

(d) determine investment criteria including investmentthreshold;

(e) undertake or approve the development, operationor maintenan@, os well as finance, appropriateinfrastructure up to the perimeter of, or within,select special economic zones, as and whendeemed necessary;

(f) review applications and grant licences to specialeconomic zone developers, operators andenterprises;

(g) promote and market special economic zones topotential special economic zone developers,operators, or other investors;

(h) administer a "one-stop" cente through whichspecial economic zone enterprises can channel alltheir applications for permits, approvals, licencesand facilities not handled directly by theAuthority, coordinatiug with such otherGovernment or private entities as may benecessary through agreements with the entities orprocedures defined in implementing regulations orsuch other prescribed procedures;

(i) exclusively perform under time-bound conditionsas may be prescribed, all administrative businessregulations and services functions in relation tothe designated special economic zones;

fi) maintain current data on the performances of theprogramme in each individual special economiczone and enterprise;

(k) establish and enhance inter-agency collaborationamong relevant State agencies to ensurecompliance with all applicable laws, proceduresand other aprplicable requirements;

(l) recommend to the Cabinet Secretary a negativelist of activities that are prohibited in the specialeconomic zones including an additional set of

The Special Economic Tanes Bill,2015

restricted activities under the regulations madethereunder;

(m)recommend to the Cabinet Secretary to suspend orcancel the licences of a special economic zoneenterprise or a special economic zone developerwhich is in the violation of this Act, the EastAfrican Community Customs Management Act orthe Value Added Tax Act;

(n) regulate the access of non-licensed serviceproviders from the customs territory as may berequired in order to service individual enterprises;

(o) regulate, implement, monitor and supervise allaspects of the special economic zones regime setforth in this Act; and

(p) maintain a register of enterprises and residentsdomiciled in the special economic zones.

12. (l) The Authority shall be administered by aBoard of Directors which shall consist of-

(a) a Chairperson to be appointed by the President;

(b) the Principal Secretary of the ministry for thetime being responsible for maffers relating toindustrialization and trade or his designatedalternate;

(c) the Principal Secretary to the teasury or hisdesignated alternate;

(d) the Chairperson of the National Land Commissionor his designated alternate;

(e) the Commissioner General of the Kenya RevenueAuthority or his designated alternate;

(f1 not more than five other directors appointed by theCabinet Secretary, from the private sector whohave distinguished service, experience andexpertise in any of the following fields-(i) industry or trade;

(iD information and communications technology;

(iii) manufacturing;

(iv) law;

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(v) engineering;

(vi) economics or financial matters;

(vii) agriculture and agro-processing;

(viii)transport and logistics;

(ix) tourism and recreational services;

(x) applied research and development;

or

(xi) any other field relevant to the specialeconomic zones progranrme.

(g) the Chief Executive Officer who shall be an ex

fficio member.

(2) No person shall be appointed under subsection (l)(f; unless such person satisfies the requirements of ChapterSix of the Constitution of Kenya.

13. (1) The conduct and regulation ofthe business andaffairs of the Board shall be as set out in the Schedule.

(2) Except as provided in the Schedule, the Board mayregulate its own procedure.

f4. (1) The Board shall have all powers necessary forthe proper performance of the functions of the Authorityunder this Act.

(2) Without prejudice to the generality of theforegoing, the Board shall have power to-

(a) control, supervise and administer the assets of theAuthority in such manner as best promotes thepurpose for which the Authority is established;

(b) determine the provisions to be made for capitaland recurrent expendifure and for the reserves ofthe Authority;

(c) receive any grants, gifts, donations or endowmentsand make legitimate disbursements therefrom;

(d) open such banking accounts for the funds of theAuthority as may be necessary;

(e) invest any of the funds of the Authority notimmediately required for its purposes in themanner provided in section 25;

Conduct of busitressand aFairs of theBoard.

Powers oftte Board.

The Special Economic Tnnes Bill, 2015

(f) perform all such other acts or undertake anyactivity as may be incidental or conducive to theattainment or fulfilment of any of the functions ofthe Authority under this Act.

15. The Authority shall pay its directors suchremuneration, fees or allowances as it may determine uponthe advice of the Cabinet Secretary.

16. (1) There shall be a Chief Executive Officer of theAuthority who shall be appointed competitively by theBoard on such tenns and conditions of service as may bespecified in the instnrment of appointment.

(2) No person shall be appointed under this sectionunless such person-

(a) possesses a relevant degree from a recognizedinstitution and has at least ten years workingexperience in matters relating to industry, trade,law, finance, economics, management,entrepreneurship or engineering;

(b) satisfies the requirements of Chapter Six of theConstitution.

(3) The Chief Executive Officer shall-(a) be the secretary to the Board; and

(b) subject to the directions of the Board, beresponsible for the day to day management of theaffairs and staffof the Board.

17. The Authority may appoint such officers and otherstaff as are necessary for the proper discharge of itsfunctions under this Act, whether directly or through one-stop shops, upon such terms and conditions of service as

the Board may determine and on the advice of the Salariesand Remuneration Commission.

lE. The Board may, by resolution either generally orany particular case, delegate to any committee or to anymember, officer, employee or agent of the Board, theexercise of any of the powers or the performance of any ofthe functions or duties of the Authority under this Act orunder any other written law.

19. (1) The staff of the Authority shall not bepersonally liable for an act which is done or purported to be

Rcrnureratim ofdirscron, .

ChiefExecutiveOfficer.

St8ffof thcAuthor$.

Delegation by &eAuthority.

Protection fiompersonal liability.

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done in good taith on the direction of the Authority or theBoard in the perfonnance or intended perfonnance of anyduty or in the exercise of any power under this Act.

(2) Any expenses incurred by a person referred to insubsection (1) in any suit or prosecution brought againsthim before any court in respect of any act which is done orpurported to be done by him under this Act on the directionof the Board shall, if the court holds that that act was donein good faith be paid out of the Fund, unless the expensesare recovered by him in that suit or prosecution.

(3) The provisions of this section shall not relieve theAuthority of the liability in tort or contract, to paycompensation or damages to any person for any tnjury tohim, his property or any of his interests caused by theexercise of any power conferred by this Act, or any otherwritten law.

20: (1) The common seal of the Authority shall bekept in such custody as the Board may direct and shall notbe used except on the order of the Board-

(2) The affixing of the corrmon seal of the Authorityshall be authenticated by the signature of the Chairpersonand the Chief Executive Officer and any document notrequired by law to be made under seal and all decisions ofthe Board may be authenticated by the signatures of boththe Chairperson and the Chief Executive Officer.

(3) Notwithstanding the provisions of subparagraph(2), the Board shall, in the absence of either theChairperson or the Chief Executive Officer in a particularmatter, nominate one member to authenticate the seal onbehalf of either the Chairperson or the Chief ExecutiveOfficer.

(4) The common seal of the Authority when affixed toa document and duly authenticated shall be judiciallynoticed and unless the contrary is proved, any necessaryorder or authorization by the Board under this section shallbe presumed to have been duly given.

PART TV - FINANCIAL PROVISIONS

21. (1) There is established a Fund of the Authority tobe known as the General Fund which shall vest in theAuthority and shall be administered by the Board.

Common ecal.

Establishmeat of thcFund.

The Special Economic 7.ones Bill,2015

(2) There shall be paid into the Fund-(a) monies provided by Parliament for that purpose,

towards expenditure incurred by the Authority inthe exercise of its powers or the performance of itsfunctions under this Act;

(b) such fees, monies or assets as may accrue to or (c)

vest in the Authority in the course of the exerciseof its powers or the performance of its functionsunder this Act or under any written law; and

(d) all monies from any other source provided for ordonated or lent to the Authority.

(3) There shall be paid out of the funds of theAuthority all such sums of money required to defray theexpenditure incurred by the Authority in the exercise,discharge and performance of its objectives, functions andduties under this Act.

(a) The balance of the funds of the Authority at theend of the financial year shall be utilized as directed by theNational Treasury.

22. The financial year of the Authority shall be theperiod of twelve months ending on the thirtieth of June in Financiatyear.

each year.

23. (1) At least three months before thecofilmencement of each financial year, the Board shall Annualestimates.

cause to be prepared estimates of the revenue andexpenditure of the Authority for that year.

(2) The annual estimates shall make provisions for allthe estimated expenditure of the Authority for the financialyear and in particular the estimates shall provide for -

(a) the payment of allowances and the charges inrespect of the directors and the salaries,allowances and other charges in respect of staff ofthe Authority.

(b) the payment of pensions, gratuities and othercharges in respect of staff of the Authority;

(c) the proper maintenance of the buildings andgrounds of the Authority;

(d) the maintenance, repair and replacement of theequipment and other property of the Authority;

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The Special Economic hnes Bill, 2015

(e) the creation of such reserve funds to meet futureor contingent liabilities in respect of retirementbenefits, insurance or replacement of buildings orequipment, or in respect of such other matters asthe Board may deem appropriate;

(0 the funding of promotion and marketing of specialeconomic zones;

(g) the funding of training, research and developmentactivities of the Authority; and

(h) any other expenditure incurred by the Authority inthe exercise, discharge, and performance of itsfunctions this Act.

(3) The annual estimates shall be approved by theBoard before the commencement of the financial year towhich they relate and shall be submitted to the CabinetSecretary for approval and after the Cabinet Secretary'sapproval, the Board shall not vary the annual estimates ofthe Authority without the consent of the Cabinet Secretary.

U. O) The Board shall cause to be kept all proper Accoutsmdildit'

books and records of income, assets of the Authority.

(2) Within a period of three months from the end ofeach financial year, the Board shall submit to the Auditor-General or to an auditor appointed under this section theaccount of the Authority together with-

(a) a statement of the income and expenditure of theauthority during that year; and

(b) a balance sheet of the Authority on the last day of (c)

that year.

(3) The accounts of the Authority shall be audited andreported upon in accordance with the Public Audit Act, No.r2or2003

2003.(4) The Authority shall within four months of the

closure of the financial yoil, submit to the CabinetSecretary, a report on the operations of the Authorityduring that year.

25. The Board may invest the funds of the Authority Investmmtornmds'

in securities, in which for the time being trustees may bylaw invest in trust funds, or in any other securities whichthe National Treasury may, from time to time, approve forthat purpose.

The Special Econotnic bnes Bill,2015

PART V-REGI]LATORY PROVISIONS

26. Aperson shall not-

(a) carry on business as a special economic'zonedeveloper or operator or enterprise;

(b) hold himself out as providing or maintainingactivities or facilities within a special economiczone,

except under and in accordance with a licence issued underthis Act.

27, (I) A person who, intends to carry on business as aspecial economic zone developer, operator or enterprise,shall apply in the prescribed form to the Authority for anappropriate licence or for a renewal of the licence.

(2) On receiving an application for licence or for arenewal' of a licence, the Authority, may on therecommendation of the Commissioner of Customs andupon payment of the prescribed fee, issue to the applicantthe appropriate licence or renew the licence.

(3) In evaluating applications for special economiczone developer, operator and enterprise licences, theAuthority shall assess the specific engineering andfinancial plans, financial viability, and environmental andsocial impact of the applicant's proposed special economiczone project, as appropriate.

(4) The Authority shall expeditiously render itsdecisions on licensing under this Act within a reasonableperiod of time from the date on which the duly completedapplication form is submitted together with relevantsupporting documents.

(5) A licence issued under this section shall-(a) be in the prescribed fonn;

(b) authorize the licensee to carry on business as aspecial economic zone developer, operator orenterprise;

(c) be specific with regard to the activity to be carriedout under the licence;

(d) be valid for such period as the Authority mayprescribe;

Lioence to operale inspecial eoonomiczone.

Application mdisue of licmce.

The Special Economic bnes Bill,2015

(e) contain such other conditions as the Authoritydeems necessary.

(6) A licence issued under this section may-(a) be amended at any time on written notice to the

holder by the authority, if in its opinion theamendment is necessary; or

(b) be suspended or revoked by the Authority if theholder fails to comply with the conditionscontained in the licence laid down in this Act or inany regulations made thereunder and where a

licence is suspended or revoked, the holder shalltake such steps as may be recommended by theAuthority.

2E. A special economic zone developer shall, in Sffi;|if-ii"addition to such other criteria and requirements as may be zonedevelop€raod

operabr.prescnDeo-

(a) be a company incorporated in Kenya, for thepurpose of undertaking special economic zoneactivities;

(b) have the financial capacity, technical andmanagerial expertise, and associated track recordof relevant development or operational projects,required for developing or operating the specialeconomic zone; and

(c) own or lease land or premises within the specialeconomic zone as stipulated under the SpecialEconomic Zores (Land Use) Regulations.

29. (l) The benefits prescribed in Part VI of this Actshall not accrue to any enterprise unless it holds a validlicence issued by the Authority.

(2) The Authority shall grant a licence if theapplication meets the objectives of this Act, and if theproposed business enterprise -

(a) is incorporated in Kenya whether or not it is onehundred per cent foreign owned;

(b) proposes to engage in any activity or activitieseligible to be undertaken by a special economiczone enterprise in the special economic zone;

(c) does not have a negative impact on theenvironment or engage in activities impinging on

Special eoncmriczone enterpris€s.

The Special Economic Zanes Bill,2015

national seeurity or presenting a health hazard;and

(d) conducts business in accordance with the laws forthe time being in force save for any exemptionsunder this Act.

30. (1) The Authority shall keep in a form as it Registoroflicences'

considers appropriate, a register of the holders of currentlicences issued under this Act, which shall include -

(a) the compilny name; and

(b) the physical address at which the company carrieson its business.

(2) Where-(a) the holder of the licence ceases to carry on the

business to which the licence relates; or

(b) a change occurs in any particulars which arerequired to be entered in the register of licenceholders with respect to the holder of a licence,

the holder shall within fourteen days of the occurrence ofthe event concerned give to the Authority particulars of thechange in the prescribed form.

PART YI-RIGHTS AND OBLIGATIONS OFSPECIAL ECONOn/flC ZOI{E ENTITIES

31. The Authority shall give notice to the KenyaRevenue Authority of every special economic zone,developer, operator or enterprise licensed under this Actspecifying-

(a) the activities in respect of which the enterprise islicensed; and

O) any conditions attached to the licence.

32. (1) Taking into account the general intent of thespecial economic zone developer licence, ths Authoritymay require the special economic zolnre developer toprovide and maintain in a special economic zone suchfacilities including adequate enclosure to separate a specialeconomic zone from the customs territory, as it mayconsider necessary for the proper and efficient function ofthe zone.

Authority to givenotioo to the KonyaRevenu€ Authority.

Facilities wiltin aspecial economiczone.

The Special Ecornmic Tnnes Bill, 2015 79

(2) The Authority shall not issue an order for cessationof any activities or removal of any goods without firstgiving the concerned enterprise an opportunity of beingheard.

(3) The proper officers in each special economic zoneshall offer on-site inspection to the special economic zonefor imports into, and exports out of, the special economiczone.

(4) The Authority shall be responsible for themonitoring and enforcement of all rules, within specialeconomic zones.

33. (1) A special economic zone developer shall havethe right to-

(a) act or appoint a special economic zone operator toundertake management and administration of thespecial economic zone on its behalf subject tosubsections (2), (3) and (a) of this section, section28 (b) and such other licensing requirements asmay be prescribed;

(b) lease, sub-lease or sell land or buildings tolicensed special economic zone operators andenterprises, ffid charge rent or fees for otherservices that may be provided;

(c) acquire, dispose or transfer special economic zonelands or other assets;

(d) develop, operate and service special economiczone lands and other assets in conformity withapplicable law and its licence;

(e) provide utilities and other services in the specialeconomic zone, in accordance with its licence, andto charge fees for such services;

(f) provide utilities and other services outside thein conformity withspecial economic zone

applicable law;

(g) enjoy the benefits thatprovisions of this Act;

may accrue under the

(h) enter into conffacts with private third parties forthe development, operation, and servicing ofspecial economic zone lands and other assets,including on-site and off- site infrastructure;

Rights andobligatims of aneconomic zonedevelopet oroperalor.

The Special Economic Tones Bill,2015

(i) enter and freely participate in internationalfinancial markets, without any legal impedimentsor restrictions, to obtain funds, credits, guaranteesand other financial resources; and

O advertise and promote the special economic zonefor which it holds a licence to potential investorsand service providers.

(2) A special economic zone developer shall, in suchmanner as may be prescribed-

(a) perform such physical development works ormake such improvements to the special economiczone site and its facilities as may be requiredaccording to the plans approved by the Authority;

(b) provide adequate enclosures to segregate the zonearea from the customs territory for the protectionof revenue together with suitable provisions forthe movement of persons, conveyances, vesselsand goods entering or leaving the zone;

(c) provide or cause to be provided, adequate securityon the site, as may be determined by the Authorityin its licence;

(d) adopt and enforce such rules and regulationswithin the special economic zone that promotesafe and efficient business operations;

(e) maintain adequate and proper accounts, and otherrecords in relation to its activities, employmentstatistics, business and report on zorie activities,performance and development to the Authority ona periodic basis or as required by the Auttrority;and

(f) register all leases with the Authority.(3) The accounts and records required uuder

paragraph (e) of subsection (2) shalt be maintained in anyof the official languages.

(4) A special economic zone developer or a specialeconomic zone operator who fails to maintain adequate andproper accounts and other records as required by thissection commits an offence and is liable to a fine notexceeding three hundred thousand shillings or toimpriconment for a term not exceeding six months or both,

The Special Econornic hnes Bill,2015 8l

33. A licensed special econoilis zone enterprise shallenjoy-

(a) the full protection of its property rights against allrisks of nationalization or expropriation;

(b) the right to fully repaniate all capital and profits,without any foreign exchange impediments;

(c) the right of protection of industrial and intellectualproperty rights, in particular patents, copyrights,business names, industrial designs, technicalprocesses and trademarks;

(d) the right to admit into the special economic zonefor which it is licensed, to export and sell in thecustoms territory all classes or kinds of goods andservices in accordance with the custom laws of theEast African Community;

(e) the right to tansact and carry on business with a

non special economic zones enterprise;

(f) the right to transact and carry on business withnon-special economic zone enterprises;

G) the right to conffact with any other enteqprise, toboy, sell, lease, sub-let or otherwise exercise,manage, or transfer land or buildings within aspecial eqonomic zone, subject to the saidenterprise's own property rights;

(h) the right to contract with any other enterprise, tobuy, sell, lease, sub-let or otherwise exercise,manage or tranefer land or buildings within a

special economie zone subject to the provisions ofthe East Afriean Community CustomsManagement Act and applicable regulations inrespect of the activities of such enterprise withinthe special economic znnei

(i) the right to determine the prices of any of itsgoods or servi€ps sgld inside or outside the specialeconomic zone for whi.ch it io licensed;

0 tte benefits in thc natiqnal contcxt of an oBeR,

free, competitive itrveotment environmentincluding the right to fteely engage with thespecial economic zone for whieh it is licensed inany blsiness, Eadp, manufacturing or servlQeactivity not prohibitcd by thlo.A,ct; and

Rights ofspecialmnmicrcneentorprises.

82 The Special Economic hnes Bill,2015

(k) all other rights and benefits granted to licensedspecial economic zones enterprises under thisAct.

35. (1) All licensed special economic zone enterprises,developers and operators shall be granted exemption fromall existing taxes and duties payable under the Customs andExcise Act, Income Tax Act, East African CommunityCustoms Management Act and Value Added Tax Act, onall special economic zone transactions.

(2) Subject to subsection (1), the licensed specialeconomic zone enterprises, developers and operators shallbe granted the following exemptions from-

(a) stamp duty on the execution of any instrumentrelating to the business activities of specialeconomic zone enterprises, developers andoperators;

(b) the provisions of the Foreign Investments andProtection Act relating to certificate for approvedenterprise;

(c) the provisions of the Statistics Act;

(d) the payment of advertisement fees and businessservice permit fees levied by the respectiveCounty Governments' finance Acts;

(e) general liquor licence and hotel liquor licenceunder the Alcoholic Drinks Control Act, 2010;

(f) manufacturing licence under Tea Act;

(g) licence to buy, sell, mill, warehouse, export orotherwise deal in or transact business in coffeeunder the Coffee Act;

(h) licence for a factory under the Sisal Indusby Act;

(i) licence to deal in motor vehicle components oraccessories under the Motor Vehicle Componentsand Accessories Act;

O licence to trade in unwrought precious metalsunder the Trading in Unwrought Precious MetalsAct;

(k) filming licence under the Films and Stages PlaysAct;

Benefits accruing tospecial economiczone enterpriss.Cap.472,Cap.470,No. I of2005,Crp.476

Cap.sl8

No.4of 2006.

No.4 of2010

Cap.343

Cap.333

Ce.34l.

Cap.520

Cap.309

Cap.222

The Special Economic hnes Bill,2015 83

(1) rent or tenancy controls under the Landlord andTenant (Shops, Hotels and Cateringestablishments) Act; and

(m)any other exemption as may be granted under thisAct in consultation with the Cabinet Secretary forthat matter, by notice in the Gazette.

(3) The licensed special economic zone enterprises,developers and operators shall be entitled to work perrritsof up to twenty per cent of their full-time employees;

(4) Despite subsection (3), on the recommendation ofthe Authority, additional work perrnits may be obtained forspecialised sectors.

PART YII - NIISCBLLAIYEOUS PROYISIONS

36. The Cabinet Secretary may from time to timedirect the Authority to furnish in such form as ma beprescribed returns, accounts and any other information withrespect to the work and activities of the Authority.

37. (1) Where a dispute arises between a specialeconomic zone developer, operator or enterprise and theAuthority or the Government in respect of the specialeconomic zone entity, all efforts shall be made to settle thedispute through negotiations and mutual agreement for anamicable settlement.

(2) Where a dispute under subsection (l) is notsettled, the parties may submit it to arbitration inaccordance with any of the following methods as may bemutually agreed by the parties-

(a) in accordance with the rules of procedure set forthfor arbitration by the United Nations Commissionon International Trade Law, the InternationalChamber of Commerce in Paris or theInternational Center for Settlement of InvestmentDisputes Resolution; or

(b) within the framework of any bilateral ormultilateral agreement on investment protection towhich the Government and the country of whichthe investor is a national are parties; or

(c) in accordance with the Arbitration Act.

Cap.30l

Powers oftheCabioet Secretary.

Dispute Resolution.

No.4 of 195

The Special Econotnic hnes Bill,2015

(3) If the parties do not agree to the mechanisms ofsefflement of dispute under subsection 2 (a) and (b) withinfourteen days, the Arbitration Act shall apply.

3E. The Authority shall be exempt from payment ofany stamp duty chargeable under the Stamp Duty Act forland transactions.

39. (1) The Cabinet Secretary shall, upon therecorlmendation by the Authority, make regulations inrespect of any matter required by this Act to be prescribedor in respect of which regulations are authorized to bemade.

(2) Without prejudice to the generality of subsection(1), the regulations may-

(a) determine criteria for the designation andgazetting of all special economic zones;

(b) determine the application process, criteria,conditions, terms and procedures for designationof special economic zones and licensing of specialeconomic zone developers, operators andenterprises;

(c) determine the form of licences to be issued underthis Act and the procedures from amendment andrevocation of the licences;

(d) determine the general conditions of entry ofpersons into a special economic zone;

(e) require information from special economic zanedevelopers, operators and enterprises;

(f) determine the rules pertaining to theestablishment, functioning, operations andprocedures for the special economic zones one-stop-shops;

(g) determine the investment rules for specialeconomic zones; and

(h) determine the land use rules for special economiczones, development and building controls as wellas utility provisions and operations.

Exemptbn ftomStamp duty.Cap.480

Regulations.

The Special Economic Tnnes Bill,2015 85

SCIIEDT]LE (s.13)

PROVISIONS AS TO THE CONDUCT OF BUSIIYESSAI\D AF'F'AIRS OF THE BOARI)

1. The Chairperson or a director other than an ex renworonice'

fficio member shall, subject to the provisions of thisSchedule, hold office for a period of three years, on suchterms and conditions as may be specified in the instrumentof appointrnent, but may be eligible for re-appointment forone further term.

2. A director other than an ex fficio member may- vscationoroffre

(a) at any time resign from office by notice in writingto the Cabinet Secretary;

(b) be removed from office by the Cabinet Secretaryon recoflrmendation of the Board if the director-(i) has been absent from three consecutive

meetings of the Board without its permission;

(ii) is convicted of a criminal offence thatamounts to a felony under the laws of Kenya;

(iii) is incapacitated by prolonged physical ormental illness for a period exceeding sixmonths;

(iv) contravenes Chapter Six of the Constitution;or

(v) (v) is otherwise unable or unfit to dischargehis functions.

3. (l) The Board shall meet not less than four times inevery financial year and not more than four months shallelapse between the date of one meeting and the date of thenext meeting.

(2) Notwithstanding subparagraph (l), theChairperson may, and upon requisition in writing by atleast three directors, convene a special meeting of theBoard at any time for the tansaction of the business of theBoard.

(3) Unless three quarters of the total members of theBoard otherwise agree, at least fourteen days' writtennotice of every meeting of the Board shall be given toevery member of the Board.

The Special Econornic Tanes Bill,2015

(a) The guorurn for the conduct of the business of theBoard shall be half of the total directors including theChairperson or the person presiding.

(5) The Chairperson shall preside at every meeting ofthe Board but the directors present shall elect one of theirnumber to preside whenever the Chairperson is absent, andthe person so elected shall have all the powers of theChairperson with respect to that meeting and the businesstransacted.

(6) Unless a unanimous decision is reached a decisionon any matter before the Board shall be by a majority ofthe votes of the directors present and voting, and in case ofan equality of votes, the Chairperson or the personpresiding shall have a casting vote.

(7) Subject to subparagraph (4), no proceedings oftheBoard shall be invalid by reason only of a vacancy amongthe directors thereof.

(8) Subject to the provisions of this Schedule, theBoard may determine its own procedure and the procedurefor any committee of the Board and for the attendance ofother persons at its meetings and may make standing ordersin respect thereof.

4. (1) The Board may establish such committees as itmay deem appropriate to perform such functions andresponsibilities as it may determine.

(2) The Board shall appoint the chairperson of acommittee established under subparagraph 0) fromamongst its directors.

(3) The board may where it deems appropriate, co-optany person to attend the deliberations of any of itscommittees.

(4) All decisions by the committees appointed undersubsection (1) shall be ratified by the Board.

5. (l) A director who has an interest in any contact,or other matter present at a meeting shall at the meetingand as soon as reasonably practicable after thecommencernent, disclose the fact thereof and shall not takepart in the consideration or discussion of, or vote on, anyquestions with respect to the contract or other maffer, or becounted in the quonrm of the meeting during considerationof the matter.

Committees of theBoard-

Disclosure ofintarcst

The Special Economic Tanes Bill,2015

(2) A disclosure of interest made under subparagraph(l) shall be recorded in the minutes of the meeting at whichit is made.

(3) A director who contravenes subparagraph (1)

, commits an offence and is liable to a fine not exceedingtwo hundred thousand shillings.

6. Any contract or instrument which, if entered into fffiil'or executed by a person not being a body corporate, wouldnot require to be under seal may be entered into orexecuted on behalfofthe Board by any person or executedon behalf of the Board by any person generally or speciallyauthorized by the Board for that purpose.

87

The Special Economic hnes Bill,2015

MEMORANDTJM OF OBJECTS AI\D REASONS

The purpose of this Bill is to provide for the establishment of specialeconomic zones, the promotion and facilitation of global and localinvestors, the development and management of enabling envirorunent forsuch inveshents.

Part I of the Bill contains preliminary provisions.

Clause 3 provides for the objects and purposes of the Act which iacludethe creation of an enabling environment for the development of all aspectsof special economic zones and the regulation and adminisfration ofactivities within the special economic zones with due regard to theprinciples of openness competitiveness and transparency.

Paft II of the Bill contains provisions relating to the creation and scope ofthe speoial economic zones

Clause 4 provides for the deolaration of special economic zones by theCabinet Secretary with due regard to the protection of the public interest.

Claure 5 outlines the criteria for designating and determining areas to bespecial economic zones by the Authority.

Clause 6 provides for instances where goods processed or imported into aspecial economio zone axe deemed to have been exported or imported intoKenya.

Clruse 7 provides for the treafinent of goods within a special economiozone.

Clause E provides for removal of goods from a special economic zone.

Clause 9 provides for receipts and payments of monies to enterpriseswithin the special economic zones.

PART III of the Bill has provisions relating to the Special EconomicZones Authority.

Clause 10 establishes the Special Economic Zones Authority as a bodycorporate.

Clause 11 provides the functions of the Authority.

The Special Bconomic bnes Bill,2015

Clause 12 establishes the Board of Directors as the adminisfrative andmanagement organ of the Authority.

Clause 16 provides for the office of the Chief Executive Offrcer of theAuthority.

i,

Clause 17 provides for the engagement of staff of the Authority by theBoard and the determination of their terms of servioe.

PART fV of the Bill contains the financial provisions.

Clause 2l provides for the establishment of the Fund.

Clause 22 provides for the finanoial year of the Authority which is thesame as the Government financial year.

Clause 23 provides for the preparation and content of the annual estimatesof the Authority.

Clruse 25 provides for the invesfrnent of funds ofthe Authority.

Part V contains provisions on liconsing and regishation of entities in thespecial economic zones.

Clause 26 provides that persons must be licensed to engage in thobusiness of processing, exporting, importing or other aotivities within thespecial economio zones.

Clause 27 sets out the prooedure for application and issuance of a licenceunder the Act.

Clause 28 provides for requirements needed to be fulfilled when applyingfor a licence as a special economic zones developer and operator.

Clause 29 provides for requirements needed to be fulfilled when applyingfor a licenoe as special economic zones enterprise.

Clause 30 requires the Authority to keep a register of licences issuedunder the Act.

Part YI of the Bill contains provisions relating to the rights andobligations of special economic zone entities and players.

The Special Economic hnes Bill,2015

Clause 31 requires the Authority to give notice to the Kenya RevenueAuthority of every enterprise licensed to operate in the special economiczone speciffing the activities it's allowed to undertake.

Clause 32 provides for facilities a special economic zones developer shallbe required to maintain.

Clause 33 outlines the rights of a special economic zone developer.

Clause 34 outlines the rights of a special economic zones enterprise.

Clause 35 further outlines the benefits that accrue to a special economiczone enterprise.

Part VII of the Bill has miscellaneous provisions.

Clause 36 deals with the powers of the Cabinet Secretary to issuedirections to the Authority in respect to its work.

Clause 37 provides a dispute resolution mechanism for disputes between aspecial economic zone enterprise and the Authority.

Clause 38 exempts the authority from payment of stamp duty.

Clause 39 empowers the Cabinet Secretary upon the recommendation ofthe Authority to make regulations for the better carrying out of theprovisions of the Act.

Statement on the delegation of legislative powers and limitation offundamental rights and freedoms

The Bill does not limit fundamental rights and freedoms.

This law when enacted will confer on the Cabinet Secretary power tomake provisions having force of law in terms of Article 94 (6) of theConstitution of Kenya. The regulations made under this Act by theCabinet Secretary shall be limited to bringing into effect provisions of thisAct. The purpose and object of these regulations include the following-

(a) determine criteria for the designation and gazetting of all specialeconomic zones;

(b) determine the application process, criteria, conditions, terms andprocedures for designation of special economic zones and licensingof special economic zone developers, operators and enterprises;

The Special Economic bnes Bill, 2015

(c) detemine the form of licences to be issued under this Act and theprocedures from amendment and revocation of the licences;

(d) detennine the general conditions of entry of persons into a specialeconomic zone;

(e) require information from special economic zotnre developers,operators and enterprises;

(f) deterrnine the rules pertaining to the establishment, functioning,operations and procedures for the special economic zones one-stop-shops;

(g) determine the investuent rules for special economic zones;

(e) determine the land use rules for special economic zones,developme,nt and building confrols as well as utility provisionsand operations.

Statement that the Bill concerns county governments

The Bill concerns County Governments in terms of Article 110 (1) (a) ofthe Constitution as clause 35(2) seeks to exempt the special economiczones from certain revenue measures that are within the firnctions andpowers of County Govenrment set out in the Fourth Schedule to theConstitution.

Stetement that the Bill is a money Bill within the meaning of Article114 of the Constitution

The enachnent of this Bill may occasion additional expenditure of publicfunds. The Bill proposes to establish the Special economic ZonesAuthority under section 10. Additionally, there is a fund established undersection 21.

Dated the l2th February, 2015.

ADEN DUALE,Leader of Majority.

9t

I