FREE-TRADE ZONE ACT("Off. Herald of RS", No. 62/2006) |
Article 1
The present Act establishes the conditions for setting the locality and operation of a free-trade zone, lines of business which may be conducted in a free trade zone, requirements for the conduct of such business and requirements for dissolution of a free-trade zone, as well as govern the establishment, legal status and purview of the Free-Trade Zone Authority.
Article 2
The meaning of some of the terms and expressions used in the present Act shall be as follows:
1) Free-Trade Zone is a part of the territory of the Republic of Serbia (hereinafter: Serbia), which is specially fenced-in and marked and in which business is conducted under the conditions provided by the present Act (hereinafter: the zone);
2) Zone Founder is a local self-government agency, company, i.e. sole trader who has decided to found a zone, or has concluded a contract with another founder for the purpose of founding a zone, and who applies for granting of a consent for the setting of the locality, through a zone management company;
3) Zone Management Company is a company which provides the conditions for the unhindered business operations in the zone;
4) Associated Person is a person having the characteristics of an associated person in terms of the law governing the corporate tax;
5) Zone User is a legal or natural person conducting a business in a zone;
6) Zone founding is making a decision by a competent local self-government agency, a company, i.e. sole trader to found a zone, or the conclusion of a zone-founding contract between a local self-government agency, a company, i.e. sole trader;
7) Government approval is a Government act setting the zone locality.
8) Zone locality is a piece of land determined by cadastral lots and being of a surface area expressed in appropriate units of measurement.
Article 3
The rights of a zone founder, a zone management company and zone users provided by the present Act may not be reduced by another law or some other regulations.
Article 4
The locality of a zone is set subject to the Government’s consent.
A zone management company may apply to the Government for consent to the locality of the zone, through the ministry responsible for finances.
Article 5
A zone management company may file the application referred to in Article 4 of the present Act with the proviso that:
1) The zone management company’s founders are the zone founders.
The zone founders may incorporate only one zone management company;
2) It is registered in the Register of Business Entities for the activity of zone management;
3) The responsible official of the zone founder, i.e. the responsible official of the zone management company has not been convicted by a final judgment for crimes against the economy and property, for illicit trading and crimes for the breach of official duty.
The requirements referred to in paragraph 1 of this item relate to an associated person with the zone management company, as well as to a legal person whose legal successor is the zone management company;
4) The responsible official of the zone management company has not been, in the last three years, a member of the management, supervisory board of or holder of special authorizations in a legal person against which the liquidation, i.e. bankruptcy proceedings were carried out;
5) The zone founder has not been the founder of a zone management company whose consent for the founding of the free-trade zone has been revoked by the decision of the Government.
This requirement does not relate to a local self-government agency.
Article 6
The application referred to in Article 4 of the present Act includes the following:
1) Registered name and head office and Tax Identification Number of the zone founder;
2) Registered name and head office and Tax Identification Number of the zone management company;
3) Data about the initial capital of the zone management company;
4) Name of the zone and its locality with defined boundaries;
5) Information on restructuring, if a business entity undergoing restructuring is situated in the zone;
6) Feasibility study on the existence of economic justification for setting the zone’s locality with particular reference to estimated foreign investments and expected impacts, particularly with regard to the production of goods and provision of services, employment and transfer of modern technologies, stating the lines of business to be conducted in the zone;
7) Other data which the applicant may consider important for decision-making purposes.
The following evidence is attached to the application referred to in paragraph 1 of this Article:
1) Decision of the management bodies, a contract or some other document issued by the zone founder concerning the founding of the zone, which includes the following:
- Name of the zone founder;
- Name of the zone;
2) The register in which the zone management company is registered, i.e. verified translation of the register extract;
3) Certificate that the responsible officials were never convicted for crimes referred to in Article 5, paragraph 1, item 3, of the present Act. Such certificate may not be older than 30 days counting from the day of application;
4) Evidence that the zone founders own the title, i.e. lease or right of use on the land where the locality of the zone is set;
5) Evidence that the requirements relating to space, construction, power supply, organization, plant equipment and environmental protection, as well as other requirements for the conduct of business in the zone, are going to be satisfied;
6) Opinion of the local self-government agency as to the justifiability of founding the zone.
If a local self-government agency adopts measures to incite the development of the zone, the local self-government agency’s decisions to that effect are attached to the application referred to in paragraph 1 of this Article.
Article 7
The ministry responsible for finances evaluates the economic justifiability of the filed application referred to in Article 4, paragraph 2 of the present Act and presents its opinion to the Government.
The setting of the zone’s locality is economically justifiable, if it is possible to see from the presented study and other presented evidence that positive impacts would be produced with regard to attracting foreign capital, production of goods and provision of services, employment, transfer of modern technologies, economic restructuring and if the conduct of business in the zone is going to help in the implementation of the Government’s development strategy and economic policy measures.
The Government sets more detailed criteria referred to in paragraph 2 of this Article for evaluation of economic justifiability of setting the zone’s locality.
Article 8
The Government’s gives consent to the setting of the zone’s locality within 30 days from the day of properly filed application.
The consent referred to in paragraph 1 of this Article includes in particular the name of the zone, its surface area, as well as the registered name and head office of the zone management company.
The consent referred to in paragraph 1 of this Article shall be revoked if the zone does not become operative within two years from the day such consent enters into force.
Article 9
The provisions of the present Act dealing with the consent to the setting of the zone’s locality apply to the expansion of a zone.
III ZONE ORGANIZATION AND MANAGEMENT
Article 10
A zone is managed by a zone management company registered for zone-management.
A zone may be managed by only one zone management company.
The zone-management company sets the organizational and technical requirements for the conduct of business in the zone.
The bylaw referred to in paragraph 3 of this Article regulates the zone working hours, movement of persons and goods in the zone, zone-management company’s commitments in connection with securing the space-related, technical and organizational requirements for the use of the zone, occupational safety and environmental protection measures, zone users’ rights and duties in relation to the zone founder, etc.
The zone management company is obliged to forward the bylaw referred to in paragraph 3 of this Article to the Free Zone Authority for consent.
The zone management company concludes the contracts with zone users on mutual rights and duties, which contain the elements stipulated in the bylaw referred to in paragraph 3 of this Article.
Article 11
A zone-management company is obliged to submit a zone operating report to the Free-Trade Zone Authority within 90 days from the expiry of the calendar year.
A zone operating report includes the following:
- Income earned by the zone management company;
- Number of users and their lines of business;
- Total value of the goods produced and services rendered in the zone;
- Total volume of import in and export from the zone;
- Amount of foreign investments;
- Number of employees of the zone management company and number of the users’ employees.
The minister responsible for finances prescribes the shape and contents of the reports referred to in paragraph 2 of this Article.
The ministry responsible for finances presents to the Government once a year the operating report covering all zones existing in Serbia, with proposal for measures.
If it finds that the business operations in the zone fail to achieve the aims laid down in the feasibility study for setting the zone’s locality, if the zone management company commits a misdemeanor defined in Article 34 of the present Act, as well as if determines that the zone management company has not taken measures to terminate the contract with a zone user who is not abiding by the zone operating conditions or who has committed a misdemeanor defined in Article 35 of the present Act or some of the misdemeanors provided by the law governing the customs system and customs procedure, the ministry responsible for finances may recommend the Government to withdraw the consent for setting of the zone’s locality.
Article 12
The users of a zone may be its founder, a zone management company, as well as other domestic and foreign legal and natural persons (hereinafter: the users).
The users conduct their business in the zone in compliance with regulations, on the basis of a contract whereby the mutual rights and duties with the zone-management company are stipulated.
The users are obliged to keep books of account relating to their business in the zone or separate books of account relating to the part of their business conducted in the zone.
At the request of the Free-Trade Zone Authority, the users are obliged to present to it information on their business operations.
Article 13
A zone must be fenced-in and clearly marked and labeled as a free-trade zone, at the entrances and exits from the zone, as well as on the riverside.
A zone may consist of several parts, on condition that they make up a functional entirety.
A zone or a part thereof, if it consists of several parts, must be fenced-in, marked and organized so that the circulation of goods and persons into the zone and out of it may only go through certain zone entrances or exits.
The fence, entrances and exits must be set up properly, secured and illuminated at night.
The zone management company must provide work premises for the customs service.
The customs surveillance and control measures are applied to the goods brought in or taken out of a zone, as well as to the goods stored in the zone, in conformity with the provisions of the law governing the customs system and customs procedure.
Article 14
The minister responsible for finances determines whether the requirements for the start of zone’s operation are fulfilled, at the recommendation of a committee he forms from the ranks of representatives of the competent authorities.
The committee referred to in paragraph 1 of this Article establishes whether the requirements relating to space and power supply, environmental protection and other technical matters of importance for operation of the zone, as well as the conditions in terms of performance of customs surveillance measures, have been satisfied.
The minister responsible for finances renders a decision within 30 days from the day of receipt of the commission’s recommendation.
The law governing the general administrative proceedings applies to the decision- making procedure.
The decision referred to in paragraph 3 of this Article is final in administrative proceedings.
The day of rendering of the decision referred to paragraph 3 of this Article is regarded as the day of the start of zone’s operation.
IV BUSINESS OPERATION IN A ZONE
Conducting a Business in a Zone
Article 15
A user may, in conformity with the present Act and a contract with the zone management company, engage in production and provision of services in the zone, in accordance with regulations.
The environment, health of people, material goods and national security may not be endangered by conducting a business and providing services in a zone.
Article 16
Foreign trade transactions may be conducted in a zone without any restrictions, in conformity with the contract.
The export of goods and services from a zone and the import of goods and services in a zone are free and without any quantitative restrictions, nor may the commercial policy measures be applicable to such import and export.
The goods prohibited from being imported, i.e. exported may not be imported in or exported from a zone.
Article 17
The goods being brought in and taken out of a zone, as well as the goods stored in a zone, are to be treated as bonded goods.
A user reports to the competent customs office all of the goods referred to in paragraph 1 brought in and taken out.
A user may move goods from the zone to another part of the territory of Serbia, i.e. bring goods in the zone from another part of the territory of Serbia, all on a temporary basis, for the purpose of subjecting them to inward, i.e. outward processing.
A user may move goods from the zone to another part of the territory of Serbia and bring goods in the zone from another part of the territory of Serbia, all on a temporary basis, for reasons relating to testing, issuance of test certificate, repair and marketing promotion.
The competent customs office approves the customs-permissible treatment of the goods referred to in paras. 3 and 4 of this Article pursuant to the law governing the customs system and customs procedures.
Article 18
The certificate showing that goods have been produced in a zone is issuable by the customs office exercising surveillance in that zone, under the prescribed regulations.
Article 19
Customs duty and other import levies are not payable for the import of goods used for business operation and erection of buildings in a zone.
Article 20
The goods put in circulation from the zone to the territory of Serbia are subject to customs duty and other import levies.
A person who puts the goods referred to in paragraph 1 of this Article on the market in the territory of Serbia is obliged to declare such goods to the customs office for customs clearance purposes.
Article 21
The obligation to pay customs duty and other import levies on the goods referred to in Article 20, paragraph 1, of the present Act begins on the day when the goods pass from the zone to the territory of Serbia.
The amount of customs duty and other import levies on the goods referred to in paragraph 1 of this Article is to be fixed in accordance with the state the goods are in and the regulations that are applicable on the day of the customs declaration’s acceptance.
The customs value of goods referred to in paragraph 1 of this Article, as well as the amount of customs debt, is fixed in conformity with the provisions of the law governing the customs system and customs procedure.
Article 22
A user is obliged to enable the implementation of customs surveillance and control measures and to keep a prescribed record of the goods being imported, i.e. brought into the zone, exported from, i.e. taken out of the zone and used in the zone.
Article 23
Any payment, collection, transfer, purchase and sale in foreign means of payment and in dinars in a zone is carried out in conformity with the regulations governing foreign currency operations.
Article 24
Founding of banks and their operation in a zone is carried out in accordance with the regulations governing banks.
Insurance business in a zone is carried out in accordance with the regulations governing insurance.
Article 25
The employment relations between employees and employers (users) in a zone are regulated by employment contract, in accordance with the act governing employment and employment relations.
Article 26
The provisions of the law governing the value-added tax apply to the entry of goods into a zone and provision of services in a zone.
A user, i.e. a zone management company may enjoy tax breaks in accordance with the regulations governing corporate tax, property tax and individual income tax.
Termination of Validity of the Consent for Determining of the Zone Locality
Article 27
The validity of the consent which determines the zone locality ceases by a Government’s decision in the following cases:
1) If it is established in the course of operation of a zone that the technical requirements prescribed by the present Act for its foundation have permanently ceased;
2) If the responsible official of the zone management company, as well as the responsible official in the legal person whose legal successor is the zone management company, has been convicted by a final verdict for a crime act against the economy, property, impermissible trading and against official duty;
3) At the recommendation of the ministry responsible for finances, in the cases referred to in Article 11, paragraph 5, of the present Act;
4) At the request of the zone management company.
The decision on the termination of validity of the consent for determination of the zone locality is adopted by the Government, at the recommendation of the ministry responsible for finances.
Article 28
A zone dissolves upon expiry of the time limit of 90 days from the day of rendering of the decision of the Government on termination of the validity of the consent for determination of the zone locality.
Article 29
The zone management company, i.e. the user is obliged to arrange for the goods imported from abroad to be customs cleared, returned abroad or surrendered to the customs office unconditionally, within 60 days from the expiration of the time limit referred to in Article 28 of the present Act.
Customs duty and other import levies are payable on the goods referred to in paragraph 1 of this Article, in accordance with the state the goods are in and the regulations valid on the day of the customs declaration’s acceptance.
Notwithstanding the provision of paragraph 2 of this Article, customs duty is not payable on the equipment which was imported in the zone for the purpose of conducting business in the zone at least three years before the dissolution of the zone.
The provision of paragraph 2 of this Article does not preclude the application of other regulations on the basis of which the right to exemption from customs duty and other import levies may be exercised.
Article 30
A zone user shall retain the title to the buildings it has erected and the things and rights it had imported, i.e. brought into the zone, and in the event of the zone’s dissolution, it has the right to carry on conducting its business in accordance with the regulations dealing with the conduct of business in the territory outside the zone.
Article 31
The Free-Trade Zone Authority is hereby established as an administrative authority in the framework of the ministry responsible for finances, for dealing with government administration matters in the domain of free-trade zones.
The Free-trade Zone Authority is headed by its Director.
Purview of the Free-Trade Zone Authority
Article 32
The duties of the Free-Trade Zone Authority shall be as follows:
1) In matters relating to the development of zones suited to the Government interests:
- Implementing the national policy of development of zones for the purpose of increasing the inflow of direct investments and greater employment of work force;
- Participating in the drafting of regulations dealing with the operation of zones;
- Considering applications for giving consent for determination of the zone locality and submitting its opinion to the ministry responsible for finances;
- Providing initiative and coordinating with competent government agencies the consideration of technical matters in the field of conducting business in the zones, for the sake of proper application of the present Act and its harmonization with Serbian regulations;
- Organizing and coordinating cooperation between competent government agencies, company for zone management, interested investors and users;
- Giving technical assistance to investors in the process of decision-making whether to invest in the zones;
- Giving technical assistance to investors and companies that manage the zones in all phases of program application in the zones;
- Organizing direct contacts between interested investors and zone management companies;
- Giving technical assistance to interested investors in the development of their programs in the zones;
- Cooperating with the Serbian Chamber of Industry and Commerce and other non-profit and volunteering organizations;
- Cooperating with foreign institutions and specialists in the zone domain;
- Creating conditions, together with the zone management companies, for the development of infrastructure in the zones.
2) In matters relating to zone promotion:
- Cooperating with the Foreign Investment and Export Promotion Agency (hereinafter: FIEPA) concerning the promotion of investment and operation in the zones, by presenting special incentives and business opportunities in the zones, in accordance with the plan and program adopted by the ministry responsible for finances and FIEPA;
- Keeping the investors informed on the incentives to investing in the zones;
- Forming and updating a database on the zones and incentives to doing business in Serbia, in cooperation with FIEPA.
3) In matters relating to zone control and supervision:
- Giving consideration to the zone operating reports and recommending their adoption to the ministry responsible for finances;
- Recommending to the minister responsible for finances the form and contents of the application form for request for providing consent to determining of the zone locality, operation of and supervision of zones’ operation and its users, for the sake of harmonized procedures in all zones existing in Serbia;
- Recommending to the competent government agencies additional control measures to be applied in the zones, if necessary.
VII SUPERVISION OVER THE IMPLEMENTATION OF THE LAW
Article 33
The competent authorities exercise supervision over the implementation of provisions of the present Act within the scope of their authority.
Article 34
A zone management company shall be fined 10,000 to 1,000,000 dinars for a misdemeanor in the following cases:
1) If it fails to adopt a bylaw stipulating the conditions under which the zone users may conduct their business in the zone (Article 10, paragraph 3),
2) If it fails to present the zone operating report within the prescribed time limit (Article 11, paragraph 1);
3) If it allows operation of a business in the zone which poses a threat to the environment (Article 15, paragraph 2).
A responsible official of a zone management company shall also be punished for the misdemeanor referred to in paragraph 1 of this Article with a fine of 500 to 50,000 Dinars.
Article 35
A user – legal person shall be fined 10,000 to 1,000,000 dinars for a misdemeanor in the following cases:
1) If it is not keeping books of account for its business in the zone (Article 12, paragraph 3);
2) If it fails to present the report on its business in the zone at the request of the Free-Trade Zone Authority (Article 12, paragraph 4);
3) If by conducting a business in the zone, it is posing a threat to the environment (Article 15, paragraph 2);
4) If it is not keeping the requisite records of goods (Article 22).
A responsible official in a legal person shall also be fined 500 to 50,000 dinars for the misdemeanor referred to in paragraph 1 of this Article.
A user – natural person shall be fined 500 to 50,000 dinars for the misdemeanor referred to in paragraph 1 of this Article.
IX TRANSITIONAL AND CONCLUDING PROVISIONS
Article 36
The zones which began to operate prior to the entry into force of the present Act are obliged to file with the ministry responsible for finances the applications for providing consent for determining the locality of a zone within 90 days from the day of entry into force of the present Act.
At the request of the Free-Trade Zone Authority, the zones referred to in paragraph 1 of this Article are obliged to present the data in connection with the zone founding feasibility study, which are required for assessment of the success of the zone operations, and also at the request of the Free-Trade Zone Authority any other needed data or evidence referred to in Article 6 of the present Act.
Article 37
Pending the establishment of the Free-Trade Zone Authority, the ministry responsible for finances shall perform the duties that authority should perform under the present Act.
Article 38
As of the day of entry into force of the present Act, the Free-Trade Zone Act („Official Gazette of FRY“, Nos. 81/94 and 28/96, and “Official Herald of RS”, No. 101/05) are repealed.
Article 39
The present Act enters into force on the eighth day upon its publication in the "Official Herald of the Republic of Serbia".