Free Zones Act

The Act will come into force on a date appointed by the Minister by statutory instrument.

This section provides definitions for terms used in the Act.

The Minister may declare any building or area of land in Uganda to be a free zone, on the recommendation of the Authority and by statutory instrument.

The Authority must be satisfied of specified factors before recommending an area to be declared a free zone.

A free zone must be established in an area determined by spatial or physical plans for a locality, and construction and other activities in a free zone must be in the public interest.

Members serve three-year terms (reappointment allowed for one additional term); the Minister may remove members and appoint replacements; members may resign in writing with the resignation taking effect one month after the Minister receives the letter.

Board meetings must be conducted in the manner prescribed in Schedule 2 to this Act.

The Executive Director must be the secretary to the Board.

The Authority has multiple functions, including responsibility for establishing, managing and controlling free zones and advising the Government on free-zone matters.

The Minister may, in writing, give policy directions to the Board, and the Board must give effect to those directions.

The Authority must have a Secretariat headed by the Executive Director; the Secretariat must have officers and staff determined by the Board and must perform functions assigned by the Board.

The Minister must appoint the Executive Director on the Board's recommendation; the Executive Director must meet specified fitness criteria, hold office on terms in the instrument of appointment, serve as the Authority's Chief Executive Officer, and (subject to general directions from the Board) manage day-to-day administration and implement Board decisions.

The Board must appoint necessary officers and staff, must pay them remuneration as it determines, and may delegate appointment powers to committees or officers.

A member, officer or other staff of the Authority is not personally liable in civil proceedings for acts or omissions done in good faith while exercising functions under this Act.

Establishes the Uganda Free Zones Authority as a corporate body with perpetual succession and a common seal and permits it, in its own name, to enter contracts, hold and dispose of property, sue and be sued, and perform acts that a body corporate may lawfully do.

The governing body of the Authority shall be the Uganda Free Zones Authority Board.

The Board must perform specified governance and management functions for the Authority, including setting policy, directing the Executive Director, approving organizational arrangements, prescribing administrative measures to safeguard revenue, establishing committees, and, subject to section 16, appointing, removing and suspending staff.

The Minister must appoint the Chairperson and other members of the Board; the Chairperson and Vice Chairperson must be appointed from the private sector; the Board's membership is listed and includes an ex officio member from the Uganda Revenue Authority.

The Authority's funds must come from parliamentary appropriations, grants and loans, fees and charges for supplies, and other money or securities; the Authority may levy fees determined by the Board; and the Authority must provide and administer grants and facilities for free zone development when authorized by the Government.

The Authority may open and maintain bank accounts as necessary to perform its functions.

The Secretariat must prepare and submit to the Board estimates of the Authority's revenues and expenditure on a Minister-appointed date; it may also submit supplementary estimates before the end of the financial year.

The Authority must use the same financial year as the Government.

The Board must keep proper books and records and must prepare and submit an annual statement of accounts to the Minister, subject to any directions by the Minister and not later than three months after the end of the financial year.

Requires the Auditor General to audit the Authority's accounts annually; requires the Board to ensure submission of accounts within four months after each financial year end; grants the Auditor General access to records and entitlement to information; requires delivery of audited accounts and report to the Board and the Minister.

Activities in a free zone shall be subject to supervision by the Commissioner General.

The Commissioner General must appoint an officer to inspect free zone buildings within thirty days of receiving the application; the officer must prepare a findings report within eight days of inspection and set a rectification period if shortcomings are found; the Commissioner General must then issue a certificate or deny the request.

A certificate issued by the Commissioner General must state specified matters including the developer’s name, the Commissioner General’s consent (by Gazette order), planned activities in the free zone, the developer’s customs supervision responsibilities, conditions for the Commissioner General’s operation in the free zone, and any other relevant matters the Commissioner General considers appropriate.

The Commissioner General must alter a free zone decision when the developer changes area, locality, or activities; the developer must attach activity data to alteration requests and must inform the Commissioner General within fifteen days if a new partner joins or the zone is taken over.

The developer must provide premises for the Commissioner's activities in a free zone; the Commissioner General and customs officers have powers to inspect, restrict, prosecute, prohibit users and limit access under specified conditions.

The Commissioner General must declare, place at site and carry out customs procedures for goods in free zones in specified cases; goods leaving free zones must be registered and placed at site and may be subject to duties and VAT.

The Commissioner General may inspect goods in free zones; operators must submit transport documents each time goods are brought and must allow access to goods and documentation when the Commissioner General inspects.

If equipment is taken out of a free zone to another part of Uganda for the purpose of having customs duty paid, the enterprise must report it to the Commissioner General.

Requires users and business enterprises operating in a free zone to keep records of goods (entered, taken out, used, warehoused or changed) and requires a business enterprise to keep those records in chronological order and retain them for five years; the Commissioner General must prescribe the form, content and manner of records; contravention is an offence punishable by a fine not exceeding fifty currency points on conviction.

One or more domestic or foreign developers may establish a free zone; multiple developers must sign an agreement that is filed with and approved by the Authority; a developer must be a Ugandan-registered/incorporated company solely for developing and operating a free zone and must demonstrate capacity and competence under Minister-prescribed criteria.

A developer must clearly identify the free zone area it proposes to establish.

A person must not carry on business as a developer of a free zone without a valid licence under this Act.

An applicant for a developer’s licence must submit to the Authority a written application to establish a free zone containing specified information.

The Authority must require an applicant for a free zone licence to demonstrate capacity to develop and manage a free zone under criteria set by the Minister in regulations.

The Authority must investigate each licence application and prepare a detailed report within three months; it must grant a licence if satisfied the application contains required information and complies with conditions and development objectives; if it refuses it must state reasons in writing; an aggrieved person may appeal to the Minister within three months as provided in section 75.

A free zone must begin operations within twelve months of licence grant; the Authority may extend that period on application by a developer for just cause.

The developer must make rules for conditions, permitted activities and management of a free zone; may prescribe environmental standards; must ensure rules are consistent with Ugandan law and international agreements and publish rules in the Gazette after Authority approval.

A developer of a free zone must provide start‑up capital, facilities and assets; ensure appropriate site conditions and agreements; secure the zone with a perimeter wall or fence; keep premises and access under constant supervision; make improvements per Authority‑approved plans; and provide or facilitate infrastructure and services as submitted to the Authority.

A developer may perform a range of actions for operating, managing, improving, securing and regulating a free zone, including appointing an operator, leasing land, providing infrastructure and registering leases and services.

A developer may apply to the Authority to make changes to a free zone; "change" is defined to include several specific alterations such as enlargement, relocation, new activities, changes in developer status, and change of duration.

The developer of a free zone must submit to the Authority an annual report on its activities in the preceding year not later than four months after the year’s end.

The Authority may at any time withdraw approval given to a developer and may cancel the licence for specified reasons; an aggrieved person may appeal; when a free zone is closed a licensee shall be given reasonable time to remove goods or place them under a customs procedure.

Persons may not operate as free zone operators unless licensed by the Authority; business enterprises must apply for the free zone operator’s licence before commencing business; the Authority may grant licences after consultation and must consider specified criteria.

Operators must conduct activities in the free zone under an agreement with the developer; they must only commence activities after the Commissioner General issues a certificate confirming compliance with record-keeping and security conditions; the Commissioner General and other relevant authorities shall supervise the operator's activities.

The Authority may attach or alter conditions on licences; licensees must keep records and report annually; failing to comply with licence conditions is an offence punishable by a fine not exceeding twenty currency points.

The Authority must notify the Uganda Revenue Authority about each licensed business enterprise, specifying the enterprise's licensed activities and related licence particulars.

If a licensee is about to transfer the licensed activities, the person intending to be the transferee must apply for a licence in the prescribed form to the Authority.

The Authority can revoke a licence for breaches or conviction; before revocation it must give at least one month's written notice and consider written representations; aggrieved persons may appeal to the Minister under section 75.

Business enterprises in export processing zones are entitled to produce goods and services for export; operators must insure assets and employees; enterprises may change production lines with Board approval; contraventions of subsection (3) attract fines up to forty eight currency points or up to two years imprisonment.

Certain specified activities must not be conducted in an export processing zone.

Goods or services moved from Uganda's customs territory into an export processing zone are treated as exports; goods or services moved from an export processing zone into Uganda's customs territory are treated as imports.

Business enterprises in an export processing zone must offer services to specified recipients subject to approvals and a limit on exports.

A developer or an operator is entitled to exemptions from taxes and duties on export processing zone imported inputs used exclusively in development and production of the business enterprise, subject to limitations in the East African Customs Management Act.

The Commissioner General must not permit warehousing of domestic goods in the export processing zone if, in the Commissioner's opinion, the storage will obstruct supervisory activities; subsection (1) provides an exception.

Goods may be temporarily taken out of, or brought into, an export processing zone for refinement, finishing, repair work and marketing presentations in accordance with customs laws.

Standards and technical quality norms do not apply to goods brought into an export processing zone for warehousing, refinement, finishing, additional or repair work and not to goods temporarily withdrawn for such purposes; users in the zone may apply the destination country’s standards on manufactured goods intended for export.

Business enterprises in a free port zone may carry out limited activities such as warehousing and storage; labelling, packing and repacking; sorting, grading, cleaning and mixing; breaking bulk; simple assembly; and grouping of packages, but manufacturing or processing of goods is excluded.

Goods entering a free port zone are exempt from import duties and taxes, treated as outside Uganda's customs territory and not subject to normal customs control; goods exported from a free port zone qualify for exemptions on export-related taxes; hazardous or installation-requiring goods may only enter specially designed zones.

Lists activities that are prohibited from being conducted inside a free port zone (e.g., trading in decayed goods, radioactive materials except approved research uses, certain drugs/chemicals, weapons and explosives, products from sanctioned sources, items endangering public morals or security, items not complying with Ugandan law or international IP agreements, and malpractice/abuse of official approvals).

Goods may not be transferred between premises inside a free port zone unless the developer or its authorised officer approves the transfer.

Goods may be transferred while in a free port zone for commercial reasons, subject to terms and conditions prescribed by the Commissioner General regarding the transfer.

Sets application, endorsement, compliance and appeal procedures for removing goods from a free port zone: operators must apply to the Commissioner General using prescribed forms and attachments; the Commissioner General must endorse rejected applications with reasons; rejected operators must comply with rejection conditions within ten days or may appeal to the Minister within ten days; where the Authority approves it must inform the Commissioner General.

When goods are removed from a free port zone for home use the date of removal must be specified to determine value, quantity and applicable rates; small lots must be accompanied by a filled gate pass matching approved import/export quantities and recorded at the receiving end.

Retail trade must not be carried out in a free port zone except with the prior written permission of the Authority.

A business enterprise may provide canteen facilities on free port premises for its staff, with the developer's approval, subject to internationally approved practices, provided the goods used are not imported for free port operations.

Movable assets imported for free port facilities may be sold domestically by a free port business enterprise if not exported, upon payment of import levies; goods imported exclusively for authorised activities may be sold by the developer or another authorised business enterprise without payment subject to licence and export conditions; goods sold to the developer must not be consumed but used to further free port activities by sale.

Developers or operators in a free zone qualify for incentives; the Authority must ensure facilities are available to operators and developers to support faster start-up and efficient operation.

The Authority must establish and maintain a register of all licences granted under this Act.

Business enterprises may not be compulsorily deprived of property or be nationalised or expropriated by the State except where specified conditions are satisfied, and investors have a right of access to a court of law.

The laws of Uganda apply in free zones except where this Act provides otherwise; disputes involving developers, business enterprises, or the Authority are under the jurisdiction of a competent court of Uganda and may also be settled by arbitration under the Arbitration and Conciliation Act Cap. 4.

An aggrieved person may appeal in writing to the Minister (with written notice to the Authority) against specified Authority decisions; appeals must be made within thirty days and the Minister will appoint officials to hear representations and determine the appeal, with powers to dismiss, require issuance, quash revocation, or permit fresh application and the Authority must give effect to the Minister's determination.

The Authority must submit an annual statement of its activities to the Minister within two months after the end of the financial year.

The Minister must lay the Authority’s annual report, together with the Auditor General’s report, before Parliament within three months after receiving the statement referred to in section 76.

Public officers who, in the course of their official duties, communicate documents or information obtained under the Act to persons they are not authorised to share with commit an offence and face a fine of up to one hundred currency points; officers who fail or recklessly perform duties may be liable to disciplinary action determined by the Board or appropriate disciplinary authority.

Notices or other documents may be served on the Authority by delivering them at its registered office or by addressed, prepaid registered post to the Executive Director; service on the Authority is effected upon the Executive Director or the Secretary to the Authority.

It is an offence for a person to give false or misleading information, to refuse or neglect to provide required information, or to refuse/obstruct inspection; certain officers of bodies are treated as having committed the offence if they contribute; a defence is available if the officer proves lack of knowledge and that they took necessary steps to prevent it.

The Minister must make regulations by statutory instrument to carry the Act into effect; those regulations may set forms, procedures, limitations, performance rules, reporting formats, destruction procedures, and may prescribe penalties (including up to forty eight currency points and/or up to two years' imprisonment) and forfeiture; regulations must be consistent with existing labour and environmental laws.

The Minister may, with the approval of the Cabinet and by statutory instrument, amend any Schedule to this Act.