The Law on Free Economic Zones

THE LAW

OF TURKMENISTAN

 

On Free Economic Zones*

 

 

*Translation  from the  start

 Language of Turkmenistan

 

This Law shall determine legal, organizational and economic bases of creation, functioning and liquidation of free economic zones on the territory of Turkmenistan.

 

CHAPTER I. GENERAL PROVISIONS

 

Article 1. Main Terms


In this Law the following main terms are used:

1) free economic zone – a specially allocated territory with clear determined administrative borders, within which limits a special legal regime is established for participants of free economic zones;

2) special legal regime -  a set of legal norms establishing a preferential procedure and conditions of taxation, currency, customs regulation, simplified procedure of entry, stay and departure of natural persons, labour relations, financial-credit activity and other regimes directed at achievement of the purposes of creation of free economic zones;

3) contract for condition of activity, ground area and/or state property lease on the territory of free economic zones (hereinafter - the contract) - an agreement concluded in writing by means of drawing up of one document signed by the Committee and the participant of free economic zones for conditions of conduction of investment and enterprise activity on the territory of free economic zones and determining their rights, obligations and responsibility;

4) Committee - an executive body carrying out functions of administration management of free economic zones;

5) Authorized Body – an executive power central body carrying out  development and realization of a state policy in the field of creation, functioning of free economic zones as well as general management of free economic zones;

6) Regulating Bodies - bodies of customs, migration service, tax bodies and other executive power  bodies providing functioning of a special legal regime in free economic zones;

7) Technology Park – an association of scientific organizations, design bureaus, educational institutions, industrial enterprises or their divisions created for the purposes of acceleration of development and application of scientific-and-technical and technological achievements thanks to a concentration of highly qualified specialists, use of an equipped appropriate industrial, experimental, information base;

8) Technology Town - a regional centre on development and industrial development of high technological level production created on the basis of integration of production, science and education for activization, acceleration of innovative processes, promotion to fast and effective application of technical-and-technological innovations;

9) Tourist-Recreational Free Economic Zone - an international (regional) centre on rendering of medical and health-improving and tourist services formed on the basis of resorts, recreational zones, medical and health-improving areas, reserves for the purposes of development of their potential;

10) Offshore Banks - banks carrying out transactions in foreign currency for service of non-residents, which are registered in offshore zones, their affiliated persons, affiliated banks and isolated divisions not being independent legal entities;

11) Industrial Parks – a special territory, on which industrial and other enterprises are united with a general sphere of activity (profile industrial park) and/or using a uniform engineering infrastructure (infrastructural industrial park) - objects of power supply, gas supply, irrigation, water supply, water drain, communication network, alarm system and providing their protection.


Article 2. Legislation of Turkmenistan on Free Economic Zones

 

1. The legislation of Turkmenistan on free economic zones shall be based on the Constitution of Turkmenistan and it comprises this Law and other standard legal acts of Turkmenistan.

2. In case if the legislation of Turkmenistan establishes any other rules than those which are provided by this Law the rules of this Law shall be applied.

 

Article 3. Purview of this Law

 

The validity of this Law shall be extended to the legal relations arising after its effectiveness.

The special legal regime shall be extended exclusively to activity of participants of free economic zones carried out by them on the territory of free economic zones.

 

Article 4. Purposes of Creation of Free Economic Zones


 The creation of free economic zones in Turkmenistan shall be directed for the following purposes:

1) creation of a new infrastructure of particular regions and territories, development of existing ones;

2) increase of efficiency of enterprise activity;

3) attraction of investments (including foreign), advanced equipment and  technologies as well as development of import-substitution, use of new methods of economic management meeting market economy principles at a level of regions;

4) development of modern management and introduction of uniform system of services (“a uniform window”);

5) production of the goods (works, services) competitive in the world market, creation of new jobs, activization of foreign economic activity;

6) increase in receipt of currency proceeds from export of the goods (works, services);

7) increase in level of economic and social development of the country.

 


Article 5. Types of Free Economic Zones

 

1. On the territory of Turkmenistan the following functional types of free economic zones may be created:

1) trade including free trade zones and export zones;

2) industrial-and-production including export-import zones and industrial parks;

3) technical-innovation including technology parks and technology towns;

4) servicing, specializing in rendering of financial-credit, bank, tourist-recreational, information and other services;

5) transport-logistical including port;

6) agro-industrial;

7) complex combining functions of various functional types of free economic zones.

The creation of other types of free economic zones, except for types of free economic zones specified in this part may be carried out by making appropriate additions into this Law.

2. The functional type of free economic zones shall be determined by a nature of enterprise activity carried out or planned on its territory depending on particular objectives of zone creation and directions of investment activity.


 

Article 6. Kinds of Activity in Free Economic Zones

 

1. The participants of free economic zones shall have the right to carry out on the territory of free economic zones the kinds of activity provided by the decision on creation of free economic zones and by contracts.

The participants of free economic zones shall have the right to carry out activity on the territory of free economic zones without obtaining the license. Thus, they are obliged to observe license requirements and conditions determined by the legislation of Turkmenistan.

2. The persons not being participants of free economic zones shall have the right to carry out enterprise activity on the territory of free economic zones in accordance with the legislation of Turkmenistan without establishing of a special legal regime in relation to them.

3. On the territory of free economic zones the following shall not be allowed:

1) use of sites of bowels and any other activity being beyond the frameworks of conditions of the contract;

2) production and processing of hydrocarbon resources;

3) production of ozone-depleting substances, radioactive and chemical materials, toxic, explosive, poisonous, narcotic and psychotropic substances, pre-cursors, biologically and genetically active materials as well as trade in them;

4) production, placing of ecologically hazardous productions and objects;

5) formation and functioning of offshore banks.


 

Article 7. Conditions of Creation of Free Economic Zones

 

1. Free economic zones shall be created on the territory of one administrative-territorial unit except for tourist-recreational free economic zones.

The territory of free economic zones shall not include in full a territory of any administrative-territorial unit.

2. Free economic zones may be created only on the state reserve lands or other ground areas being in a state ownership.

At the moment of creation of free economic zones the ground areas forming their territory shall not be located in possession and/or use of citizens and legal entities, except for the ground areas which are provided for placing and use of objects necessary for functioning of such zone (engineering, transport infrastructure, educational and/or scientific-research organizations, warehouses and others) and on which such objects are placed.

3. The ground area forming the territory of free economic zones shall be provided to the Committee in gratuitous use in accordance with the procedure established by the land legislation of Turkmenistan for a period of functioning of free economic zones with subsequent transfer into lease to participants of free economic zones.

4. The state immovable property being on the ground areas within the borders of free economic zones necessary for the purposes of functioning of free economic zones shall be transferred by the Authorized Body into the authority of the Committee in accordance with the procedure established by the legislation of Turkmenistan.

5. The following shall be attached to the proposal for creation of new free economic zones made by the Authorized Body into the Cabinet of Ministers of Turkmenistan:

1) territory plan and description of borders of free economic zones;

2) draft decision of a local executive power body on establishing of borders of free economic zones;

3) draft decision on creation of free economic zones;

4) draft Regulation on a free economic zone;

5) feasibility study on expediency of creation of free economic zones with conduction of analysis of social, ecological and economic conditions of their functioning, provision with material and labour resources, communications as well  as preliminary assessment of expected social-and-economic efficiency and consequences of creation of free economic zones;

6) the plan of free economic zones specifying the proposed kinds of activity and projects planned for realization on the territory of free economic zones on the nearest and remote prospect, sources of financing of works and terms of their performance;

7) any other documents substantiating the proposals for creation of free economic zones.

 


Article 8. Participants of Free Economic Zones

 

1. The following may be participants of free economic zones:

1) legal entities of Turkmenistan irrespective of their forms of ownership and organizational-legal form;

2) legal entities of foreign states carrying out their activity on the territory of free economic zones through branches and representative offices;

3) natural persons engaged in enterprise activity without formation of a legal entity - individual businessmen.

2. The persons specified in part one of this Article shall be recognized  as participants of free economic zones after entering by the Committee, on the basis of the contract, of a respective record in the register of participants of free economic zones and a status of participant of a free economic zone shall be assigned to them.

The certificate for registration shall be issued by the Committee to the participant of free economic zones within five working days after signing of the contract with it.

In case when the applicant (branches and representative offices of a foreign legal entity) on a status of participant of a free economic zone is not registered (are not registered) in the Uniform State Register of Legal Entities of Turkmenistan, the Committee, on the basis of its (their) written application, shall render assistance by means of sending a letter-petition to the body of state registration of legal entities.

The body of state registration of legal entities, without any additional permissions and coordination with other state bodies and commissions shall carry out respective registration and their entering into the Uniform State Register of Legal Entities of Turkmenistan.

The unreasonable refusal of state registration of the participant of a free economic zone may be appealed against in a court.

3. The body of state registration of legal entities shall, within ten working days on the basis of the written application of the Committee, carry out state registration of a branch and representative office of the foreign legal entity-participant of a free economic zone on the basis of the Certificate for registration of the participant of a free economic zone and submission to them of documents established for carrying out of state registration.

4. The Committee, within five working days following the day of registration of the participant of a free economic zone or termination of its activity on the territory of a free economic zone, shall send to the divisions of the Regulating Bodies operating on the territory of a free economic zone, a copy of document confirming a respective decision-making with a covering letter.

5. The deprivation of the person of a status of the participant of a free economic zone shall be allowed only in a judicial order in cases provided by this Law.

6., The special legal regime of a free economic zone shall not be extended to branches and representative offices of the participant of a free economic zone being outside of the territory of a free economic zone, except for cases when their activity is carried out exclusively within the frameworks of the contract.

7. The special legal regime to participants of free economic zones shall be granted to persons of Turkmenistan and foreign states on the equal terms.

8. The participant of a free economic zone is obliged to make capital investments in the amount, which size shall be determined by standard legal acts of Turkmenistan and specified in the contract.

The minimum size of capital investments required for carrying out of activity in free economic zones shall be determined separately on each type of free economic zones.

CHAPTER II. CREATION AND LIQUIDATION

OF FREE ECONOMIC ZONES

 

Article 9. Creation of Free Economic Zones

 

1. The decision on creation of free economic zones shall be made by the President of Turkmenistan upon submission of the Cabinet of Ministers of Turkmenistan.

2. The following shall be determined in the decision on creation of free economic zones:

1) a territory and area of free economic zones;

2) a term for which a free economic zone is created;

3)  kinds of activity permitted in free economic zones;

4) volume, terms and sources of financing of formation of an engineering, transport and social infrastructure of free economic zones;

5) plan of arrangement and respective material equipping of free economic zones and a territory adjoining to them indicating clear borders of created free economic zones as well as financing conditions;

6) a special legal regime of free economic zones;

7) structure and procedure of transfer into the authority of the Committee of state property necessary for the purposes of functioning of free economic zones;

8) establishment of certain conditions of the contract including the initial minimum volumes of investments for the participant of a free economic zone may be established;

9) procedure of possession, use and placing of infrastructure objects after liquidation of free economic zones;

10) other provisions and conditions necessary for creation and functioning of free economic zones.

The Regulation on free economic zones shall be also approved by the decision on creation of free economic zones.

3. The free economic zone shall be created for the term not exceeding forty years with a condition of its extension in case if its activity meets the interests of national economy of Turkmenistan and complies with the purposes of creation of such free economic zone.

The decision on extension of the term of functioning of free economic zones shall be made by the President of Turkmenistan two years prior to expiration of the established term.


 

Article 10. Liquidation of Free Economic Zones

 

1. The free economic zone shall be liquidated after expiration of the term for which it has been created, except for a case provided by subparagraph two, part three, Article 9 of this Law.

2. The early liquidation of free economic zones shall be allowed exclusively in cases if:

1) it is caused by the necessity connected with provision of protection of bases of the constitutional system, provision of defensibility and safety of the state determined in accordance with generally recognized principles of the international law;

2) within two years after creation of free economic zones no contract is concluded or all contracts concluded earlier are terminated on the bases specified in part two of Article 24 of this Law.

3. The decision on early liquidation of free economic zones shall be made in the same order, which is established by this Law for its creation.

 


Article 11. Financing of Creation, Maintenance and Development of Free Economic Zones

 

1. The free economic zones shall have independent budgets formed from proceeds for granting for lease of a land, buildings and structures being in the authority of the Committee, from rendering of various services and other proceeds established by this Law and the decision on creation of such free economic zone.

2. At the stage of creation of a free economic zone its independent budget shall be formed for the account of funds involved, investment, target and other funds and other financial funds not prohibited by the legislation of Turkmenistan.

The financing connected with functioning of a free economic zone at the stage of its creation may be carried out for the account of funds of the State budget of Turkmenistan.

3. Financing of maintenance and development of free economic zones including its industrial, transport and other infrastructure shall be carried out for the account of funds of the independent budget of free economic zones or other sources.

4. The Committee shall conduct a separate account of the budget on each free economic zone, thus the funds of one free economic zone may not be used for covering of expenses connected with creation and functioning of other free economic zones.

 

CHAPTER III. MANAGEMENT OF FREE ECONOMIC ZONE

Article 12. State Policy in the Field of Free Economic Zones

 

The development and realization of a state policy in the field of free economic zones shall be carried out by the Cabinet of Ministers of Turkmenistan and the Authorized Body.

 

Article 13. Competence of Cabinet of Ministers of Turkmenistan

 

The Cabinet of Ministers of Turkmenistan shall:

1) determine a uniform state policy in the field of free economic zones in Turkmenistan;

2) submit for approval to the President of Turkmenistan the proposals for creation of free economic zones;

3) approve the Government program of creation and development of free economic zones;

4) determine the Authorized body;

5) carry out other functions directed at achievement of the purposes of creation of free economic zones.


 

Article 14. Competence and Rights of Authorized Body

 

1. The Authorized Body shall:

1) realize a uniform state policy in the field of free economic zones in Turkmenistan;

2) determine prospects of development and perfection of created free economic zones;

3) develop and submit to the Cabinet of Ministers of Turkmenistan:

a) the Government program of creation and development of free economic zones;

b) proposes and substantiations of creation, determination of their territories (change of a functional type of free economic zones) or liquidation of free economic zones;

4) coordinate functioning of free economic zones;

5) develop and approve within a scope of its competence standard legal acts of Turkmenistan in the field of free economic zones;

6) carry out preparation and retraining of personnel in the field of free economic zones;

7) coordinate activity of Regulating Bodies, other executive power bodies as well as regulate the procedure of their interaction with the Committee for creation and functioning of free economic zones;

8) carry out international cooperation in the field of free economic zones;

9) be the Constitutor of the Committee and carry out its reorganization and liquidation;

10) inform not less than once a year the Cabinet of Ministers of Turkmenistan of activity of free economic zones as well as make proposals for change of a special legal regime of free economic zones, improvement of an investment climate and contribute to investment process, decrease of investment risks and administrative barriers for the purposes of activization of investment and enterprise activity on the territory of free economic zones;

11) approve:

a) Model contract which determines procedure and conditions of change and termination of the contract including early, rights, obligations and  responsibility of the parties as well as other significant conditions;

b) form of business plan of investment project proposed for realization on the territory of free economic zones attached to the application for conclusion of the contract as well as criteria of its expert’s assessment;

ç) procedure for registration of participants of free economic zones and maintaining of the register of participants of free economic zones as well as a form of the Certificate of participant of free economic zones;

12) exercise control for expenditure of funds of investment, target and other funds allocated for arrangement of the territory of free economic zones;

13) carry out other powers in accordance with the legislation of Turkmenistan.

2. The Authorized Body shall have the right to:

1) involve the respective ministries, departments and other state bodies carrying out state control and supervision for conduction of checks of participants of free economic zones;

2) charge to the respective state bodies (organizations) to gratuitously carry out examination of various projects of the participant of free economic zones for the purposes of determination of their efficiency and compliance with the requirements of the legislation of Turkmenistan.

3. The decisions of the Authorized Body in respect of free economic zones, made within a scope of its competence, shall be obligatory for execution by all legal entities and natural persons.

 

Статья 15. Committee Competence

 

1. The Committee is a state enterprise established by the Authorized Body.

The Committee is a legal entity and it shall enjoy a status of the participant of a free economic zone.

2. The Committee shall:

1) realize the programs of development of free economic zones;

2) provide integrity and effective functioning of free economic zones; create necessary conditions for attraction of local and foreign investments and other resources in development of an infrastructure of free economic zones;

3) act as the customer of performance of works in creation of engineering, industrial, transport and other infrastructure of free economic zones;

4) conclude contracts with participants of free economic zones;

5) carry out registration of participants of free economic zones and maintain their register;

6) represent interests of participants of free economic zones in state power bodies and local government;

7) grant for lease to participants of a free economic zone of ground areas allocated for a free economic zone and state immovable property being in such zone;

8) issue as per a written request of the participant of free economic zones or inquiries of the Authorized Body, Regulating Bodies, law-enforcement or supervisory bodies of the extracts from the register of participants of free economic zones;

9) submit to the Authorized Body within the terms established by it financial, statistical and other reporting and information on results of functioning of free economic zones;

10) request from the Authorized Body, Regulating Bodies and other executive power bodies the information necessary for realization of its functions;

11) exercise control for execution by participants of free economic zones of obligations under the contract and other requirements provided by this Law and other standard legal acts of Turkmenistan on free economic zones;

12) exercise control for observance of a special legal regime of free economic zones, apply to the Authorized Body with proposals for making of changes into it;

13) exercise control for quality of construction, reconstruction, repair and maintenance of an infrastructure of free economic zones;

14) publish in printing mass media or on Internet site of the Committee the information on free economic zones including data in the state and foreign languages on availability  of ground areas and  state property not leased on the territory of free economic zones;

15) execute on the application of the participant of a free economic zone of the invitation to entry to Turkmenistan of foreign citizens and persons without citizenship for the purposes of carrying out of labour activity by them as well as their transport vehicles;

16) carry out functions of the customer on preparation of documentation on a layout of the territory of free economic zones and creation of an engineering, social and other infrastructure for the account of funds involved or funds of investment, target and other funds as well as  provide conduction of its examination;

17) manage state movable and immovable property being on the territory of free economic zones;

18) create or participate in creation of enterprises necessary for functioning and development of free economic zones;

19) assist in work of Regulating Bodies, law-enforcement and supervisory bodies on the territory of free economic zones;

20) execute other powers within the frameworks of this Law and the decision on creation of free economic zones.

3. For the purposes of efficient management of state immovable property being on the territory of free economic zones, the Committee shall have the right to involve specialized management companies, enterprises and agencies on a tender basis.

4. The Committee shall be managed by the Chairman appointed and dismissed by the President of Turkmenistan.

5. The decisions of the Committee made within a scope of its competence shall be obligatory for execution by participants of free economic zones and other persons carrying out enterprise activity on the territory of free economic zones.


Article 16. Activity of State Power Bodies and Local Government on Territory of Free Economic Zones

 

1. The state power bodies and local governments shall carry out their constitutional powers on the territory of free economic zones in a full scope.

2. In the decision on creation of free economic zones in accordance with the legislation of Turkmenistan any other powers of local governments may be established.

 

Article 17. Activity of Law-Enforcement and Supervisory Bodies on Territory of Free Economic Zones

 

1. The law-enforcement and supervisory bodies shall carry out state control for activity of participants of free economic zones in accordance with the procedure established by the legislation of Turkmenistan.

2. The state control for activity of participants of free economic zones shall be carried out in a form of planned complex checks and checks in a control order with the account of provisions provided by this Article.

3. The planned complex checks shall be conducted not less than once per three years.

4. Upon non-elimination by the participant of free economic zones of violations revealed prior to conduction of a check in a control order the participant of free economic zones may be deprived from such status on the basis of the court decision become effective and accepted as per the application of the Committee for termination of activity of such person on the territory of free economic zones.

5. The participant of a free economic zone upon conduction by law-enforcement and supervisory bodies of a planned complex check shall have the right to:

1) be present upon exercising of state control, to give explanations on the issues relating to the subject-matter of the check;

2)  receive information which provision is provided by the legislation of Turkmenistan;

3) get acquainted with the results of exercising of state control and specify in the certificates on its acquaintance, consent or disagreement with them as well as with particular actions of officials of supervisory bodies with enclosure to the certificate of their particular remarks;

4) appeal against an action (omission) of supervisory bodies and their officials in a court in accordance with the legislation of Turkmenistan.

6. The divisions of the Regulating Bodies operating on the territory of free economic zones shall carry out tax, customs, currency and other kinds of control on the territory of free economic zones in accordance with the legislation of Turkmenistan. Upon establishment of the fact of commitment by the participant of free economic zones of a material violation of the tax, customs and currency legislation of Turkmenistan expressed in causing of damage to the state in an especially large size the participant of free economic zones shall lose such status in accordance with a court decision become effective and made on the basis of the application of the Committee for termination of its activity on the territory of free economic zones.

7. The state bodies carrying out state control and supervision within a scope of their competence established by the legislation of Turkmenistan are obliged:

1) prior to conduction of respective checks of participants of free economic zones to preliminary co-ordinate in writing conduction of such checks with the Authorized Body;

2) in a course of carrying out of the specified checks to provide confidentiality of any information obtained by them and not to interfere in relations of the parties to the contract (the Committee and the participant of free economic zones).


CHAPTER IV. CONTRACT

 

Article 18. Content of  Contract

 

1. The main obligation under the contract for the participant of free economic zones is appropriate execution of declared plans of activity in free economic zones and for the Committee - a guarantee of stability of a special legal regime provided to the participant of free economic zones within a period of validity of the contract.

2. The contract shall provide:

1) obligations of the participant of free economic zones to carry out capital investments in free economic zones in volumes and within the terms;

2) lease of a ground area located in a free economic zone for a period of validity of the contract;

3) term of submission by the participant of a free economic zone to the  Committee of project documentation containing architectural, town-planning and technical solutions necessary for realization of actions provided by the business plan for carrying out of its examination;

4) other provisions and conditions agreed upon by the parties to the contract in accordance with this Law.

3. The contract shall also provide a lease of  ground area and a lease  of  state property located at  ground areas on the territory of free economic zones and being in the authority of the Committee for a period of validity of the contract;

4. The participant of a free economic zone shall not have the right to transfer to the third parties the rights and obligations under the contract.

5. The capital investments in free economic zones shall mean expenses for creation, purchase or modernization of immovable property, equipment, industrial and technological plants within the frameworks of project documentation under the contract.

6. The conditions and procedure of use of property remaining after liquidation or termination of functioning of free economic zones shall be specified in the contract.


Article 19. Documents Necessary for Conclusion of Contract. Procedure of Consideration of Application

 

1. The person intending to receive a status of the participant of a free economic zone shall submit to the Committee the application for conclusion of the contract which shall contain data:

1) on proposed activity of the applicant complying with a functional type of a free economic zone;

2) on the area of a ground area and/or state property necessary for proposed activity of the applicant;

3) on proposed volumes of capital investments including a volume of capital investments within a year from the date of conclusion of the contract.

2. The applicant shall enclose to the application for conclusion of the contract:

1) for a legal entity of Turkmenistan - copies of constituent documents certified in accordance with the established procedure and an extract from the Uniform State Register of Legal Entities of Turkmenistan;

2) for a legal entity of a foreign state - a copy of constituent documents legalized in accordance with the established procedure and a copy of the decision on establishment of the branch and representative office;

3) the power of attorney or the order certifying the powers of the representative of the applicant-legal entity;

4) for a natural person – a copy of document certified in accordance with the established procedure  on state registration of the applicant as an individual businessman and a copy of his passport (or other document substituting it);

5) the business plan of the investment project proposed for realization on the territory of a free economic zone.

3. The documents specified in parts one and two of this Article shall be accepted by the Committee as per a list. The list copy with a mark on the date of acceptance of documents the Committee shall send (hand over) to the applicant.

4. The Committee shall accept and send to the applicant not later than within ten calendar days after receipt of documents specified in parts one and two of this Article one of following decisions:

1) on conclusion of the contract for the term specified in Article 22 of this Law;

2) on refusal of conclusion of the contract specifying reasonable grounds for refusal according to part one of Article 20 of this Law.


Article 20. Refusal of Conclusion of Contract

 

1. The refusal of conclusion of the contract shall be allowed in cases of:

1) non-submission of documents specified in parts one and two of Article 19 of this Law;

2) absence on the territory of a free economic zone of a ground area meeting the conditions specified in the application for conclusion of the contract;

3) absence on the territory of a free economic zone of state immovable property meeting the conditions of the application and not transferred into possession and/or in use to the third parties;

4) non-compliance of proposed activity of the applicant  with a functional  type of a free economic zone, kinds of activity, which carrying out on the territory of a free economic zone is provided by the decision on its creation;

5) non-compliances of the business plan with the conditions of the application for conclusion of the contract or a form and criteria of its assessment.

2. The decision of the Committee on refusal of conclusion of the contract may be appealed against in the Authorized Body or in a court.


Article 21. Procedure of Conclusion of Contract

 

1. The Committee shall prepare and conclude with the applicant the contract within ten working days after decision-making on conclusion of the contract with the applicant.

2. The contract shall come into force from the date of its signing by the parties.

 

Article 22. Period of Validity of Contract

 

The contract shall be concluded for the term not exceeding the period remaining prior to a free economic zone.

 

Article 23. Procedure of Conduction of Examination of Project Documentation

 

1. The participant of a free economic zone shall, within the term provided by the contract, shall submit to the Committee project documentation necessary for carrying out of actions provided by the business plan for conduction of its examination and coordination.

2. The Committee shall provide conduction of examination of project documentation for the account of the participant of a free economic zone in accordance with the legislation of Turkmenistan.

3. The examination of project documentation shall be conducted by the Authorized state Body in the field of construction and architecture and completed by issue of the expert’s conclusion on project documentation.


 

Article 24. Termination of Contract

 

1. The contract shall be terminated:

1) upon expiration of the term for which it has been concluded;

2) early - on the bases, which are established by part two of this Article;

3) in case of termination of the contract regarding the provision on a ground area lease;

4) in case of deprivation of the person of a status of the participant of a free economic zone.

In case of early liquidation of a free economic zone the guarantees provided by Article 35 of this Law shall be granted to the participant of a free economic zone.

2. The contract may be terminated early:

1) on an agreement of the parties;

2) on the basis of the court decision become effective:

a) on the application of one of the parties in connection with violation  of significant conditions of the contract by the other party, significant change of circumstances as well as on any other bases provided by this Law;

b) on the application of the Committee in connection with the negative expert’s conclusion on project documentation, if within a reasonable term the documentation is not completed with the account of remarks and proposals stated in the specified conclusion and submitted for conduction of repeated examination. Upon early termination of the contract on the specified bases the expenses suffered by the participant of a free economic zone in connection with execution of the contract shall not be subject to compensation.

3. The following is a violation of significant conditions of the contract:

1) non-submission to the Committee by the participant of a free economic zone within the term established by the contract of project documentation for conduction of examination and coordination;

2) failure by the participant of a free economic zone in making capital investments in a volume and within the terms, which are provided by the contract;

3) failure by the participant of a free economic zone in carrying out of enterprise activity provided by the contract;

4) violation of the requirements of a ground area and/or state property lease provided by the contract;

5) other cases provided by the legislation of Turkmenistan.


 

Article 25. Consequences of Termination of Contract


 1. In case of termination of the contract and/or termination of functioning of a free economic zone the person shall lose a status of the participant of a free economic zone.

2. The person lost a status of the participant of a free economic zone shall have the right to carry out enterprise activity on the territory of a free economic zone in accordance with part two of Article 6 of this Law.

3. The person lost a status of the participant of a free economic zone including in connection with termination of functioning of a free economic zone and/or with early termination of the contract shall have the right to dispose of the property belonging to it being on the territory of a free economic zone at its own discretion in accordance with the legislation of Turkmenistan and by the decision on creation of a free economic zone.

4. After termination of the contract the property belonging to participants of free economic zones, being on the territory of free economic zones, may be expropriated in accordance with the legislation of Turkmenistan and the conditions of the contract.

5. The termination of the contract shall be the grounds for termination of its provisions on a ground area and state property lease concluded in accordance with this Law.


 

CHAPTER V. SPECIAL LEGAL REGIME OF FREE ECONOMIC ZONE

 

Article 26. Land Use Regime of Free Economic Zone


1. The Committee shall be vested in the powers on disposal of ground area on the territory of a free economic zone in accordance with the legislation of Turkmenistan and the decision on creation of a free economic zone.

2. The lease of a ground area located on the territory of a free economic zone shall not grant to the participant of a free economic zone the right of its use not for a special purpose established by the contract as well as the right of its transfer into sublease to the other persons.

3. The lease of a ground area located on the territory of a free economic zone shall not grant to the participant of a free economic zone the right of the ground area repayment.

4. In relation to participants of a free economic zone a 10-year grace period of collection of lease payment for the land shall be applied, that is they are released from the lease payment within 3 years from the moment of conclusion of the contract; the lease payment for the land within the following 7 years shall be collected at the rate of 50 percent out of the rate established by the legislation of Turkmenistan and upon expiration of this period – in a full volume.

5. The investors of Turkmenistan and foreign states shall have the right to sublease of property, property rights and assignation of rights of use by mutual consent of the parties signed the lease agreement or their assignees, except for a ground area lease. The rights of use may be used by the investor as a pledge.

6. The change of conditions of contracts regarding the provisions on a lease of ground areas, buildings, structures and other objects shall be allowed in accordance with the legislation of Turkmenistan by a mutual consent of the parties or on the court decision of Turkmenistan.

Article 27. Regime of Pricing of Free Economic Zone

 

On the territory of a free economic zone a free pricing regime on all kinds of the goods (works, services) produced shall operate.

 

Article 28. Special Currency Regime of Free Economic Zone

 

1. The participants of free economic zones shall have the right to open accounts in national and foreign currency, to freely purchase national and foreign currency and without restrictions (permissions) to use the currency being on their accounts both on the territory of free economic zones and outside it.

2. In a free economic zone a special currency regime operates and this regime shall provide the parallel circulation of national and foreign currency and conversion of national currency in hard currency.

3. The procedure of functioning of a special currency regime in a free economic zone shall be established by the Cabinet of Ministers of Turkmenistan.

 

Article 29. Tax Regime of Free Economic Zone

 

The taxation of participants of free economic zones including granting to them of tax privileges, other persons carrying out investment and enterprise activity on the territory of free economic zones as well as the Committee shall be established by the tax legislation of Turkmenistan.


 

Article 30. Peculiarities of Customs Regime of Free Economic Zone

 

1. The customs regime of a free customs area (free warehouse) shall be applied to the goods imported into the territory of a free economic zone in accordance with the customs legislation of Turkmenistan.

2. The free customs area (free warehouse) shall mean a customs regime upon which the foreign goods are placed and used within a free economic zone without payment of customs duties as well as without application to the specified goods of prohibitions and restrictions of an economic nature established by the legislation of Turkmenistan and the Turkmen goods shall be placed and used on the conditions applied to export in accordance with the export customs regime.

3. On the territories of tourist-recreational free economic zones the customs regime of a free customs area (free warehouse) shall not be applied.

4. The customs registration of the foreign and Turkmen goods placed under the customs regime of a free customs area (free warehouse) and exported from the territory of a free economic zone on the remaining part of the customs territory of Turkmenistan shall be carried out by the rules established by the customs legislation of Turkmenistan for customs registration of the foreign goods upon their release in a free circulation on the customs territory of Turkmenistan.

5. Upon export of the foreign and Turkmen goods placed under the customs regime of a free customs area (free warehouse) from the territory of a free economic zone outside the customs territory of Turkmenistan the export customs duties shall not be collected; the prohibitions and restrictions of an economic nature established by the legislation of Turkmenistan shall not be applied to the specified goods.

6. The conditions of placing of the goods under the customs regime of a free customs area (free warehouse) as well as procedure of application and completion of this customs regime shall be developed and approved by the Authorized state Body in the field of customs business.

7. The provisions of the customs regime specified in this Article shall not be extended to transit of the goods through the territory of a free economic zone.

8. The contracts for import and export of the goods, materials and equipment, performance of works (services) as well as the contracts for purchase-and-sale of the goods, materials and equipment concluded within the limits of carrying out of activity by participants of free economic zones under the contract shall be subject to the account by the Committee, thus they shall be released from registration at the State Commodity and Raw Material Exchange of Turkmenistan.


Article 31. Insurance Regime of Free Economic Zone

 

1. The insurance of investments and risks of participants of free economic zones shall be carried out on a voluntary basis.

2. The insurance protection shall be provided in accordance with the legislation of Turkmenistan.

 

Article 32. Labour Relations in Free Economic Zone

 

1. For work in a free economic zone local labour resources shall be involved in a priority order as well as persons living in other regions of Turkmenistan and foreign citizens, persons without citizenship may be involved as well.

2. The labour relations in a free economic zone shall be regulated by the labour legislation of Turkmenistan, labour and collective contracts (agreements).

3. The participants of free economic zones and foreign citizens and persons without the citizenship intending to work in such zones shall be released from the requirement for obtaining of the permission for labour activity in Turkmenistan, as well as from observance of the parity of a quantity of citizens of Turkmenistan and foreign citizens engaged by the employer established by the legislation of Turkmenistan.


Article 33. Peculiarities of Stay in Free Economic Zone

 

1. The registration of foreign participants of a free economic zone, citizens of foreign states and persons without the citizenship intending to work on this territory shall be made in a simplified order.

2. The simplified procedure for registration of foreign participants of a free economic zone and citizens of foreign states and persons without the citizenship intending to work on this territory shall be determined by the State Migration Service of Turkmenistan.

 

Article 34.  Account and Reporting

 

The accounting, financial-and-statistical reporting on the territory of a free economic zone shall be carried out in accordance with the procedure established by the legislation of Turkmenistan.


 

CHAPTER VI.  GUARANTEES GRANTED TO PARTICIPANTS OF FREE ECONOMIC ZONE

 

Article 35. Guarantees upon Change of Legislation of Turkmenistan


 

1. The stability of conditions of conduction of investment and enterprise activity on the territory of a free economic zone shall be guaranteed to the participant of a free economic zone by the state.

Turkmenistan shall guarantee observance of rights and legitimate interests of participants of a free economic zone.

2. In case of early liquidation or change of a special legal regime of a free economic zone including change of borders of its territory, the right of continuation of the activity carried out by them on the territory of a free economic zone shall be guaranteed to participants of a free economic zone on the conditions provided by the contract prior to expiration of a term of the contract but no more than for ten years. The specified term shall be estimated from the date of cancellation or change of a special legal regime of a free economic zone.

The provisions of this part shall also be extended to the tax legislation of Turkmenistan.

3. The guarantees of the rights and protection of investments shall be extended to all persons that carry out investments into a free economic zone provided by the legislation of Turkmenistan on investment activity and foreign investments.

The state shall guarantee to such persons the right to export of profit and investments outside the borders of such zone and the state border of Turkmenistan.

4. The provisions of parts two and three of this Article shall not be applied in case of change of the legislation of Turkmenistan exclusively for the purposes of protection of bases of the constitutional system, provision of defensibility and safety of the state.

5. The nationalization by the state of property of participants to a free economic zone shall not be allowed.

6. Any discrimination of enterprises with foreign investments shall not be allowed in a free economic zone in comparison with other enterprises operating in a free economic zone as well as measures for forced withdrawal of foreign investments (nationalization, requisition, confiscation) or other similar measures according to their consequences.

7. The invested property sequester shall not be allowed, except for temporary suspension of the right until repayment by the investor of its obligations.


 

Article 36. Settlement of Disputes

 

The disputes connected with creation or termination of functioning of a free economic zone, violation by participants of free economic zones of conditions of the contract as well as other disputes arising out of the relations regulated by this Law shall be settled in accordance with the procedure established by the legislation of Turkmenistan.


 

Article 37.Responsibility for Violation of Legislation of Turkmenistan on Free Economic Zones

 

The officials of state power bodies, local governments, participants of free economic zones violating the legislation of Turkmenistan on free economic zones shall bear responsibility established by the legislation of Turkmenistan.

 

CHAPTER VII. FINAL PROVISIONS

 

Article 38. Effectiveness of this Law


1. This Law shall come into force from the date of its official publication.

2. The standard legal acts of Turkmenistan contradicting this Law shall be subject to alignment with this Law within three months from the date of effectiveness of this Law.

3. To recognize as become invalid:

The law of Turkmenistan dated 8th October 1993 “On Economic Zone of Free Enterprise Activity’” (The Bulletin of the Supreme Council of Turkmenistan, 1993, No 9-10, Art. 90);

a part connected with changes of the Law of Turkmenistan “On Economic Zone of Free Enterprise Activity’, the Law of Turkmenistan dated 23rd September 1994 “On Changes and Additions to Some Legislative Acts of Turkmenistan” (The Bulletin of Mejlis of Turkmenistan, 1994, No3, Art.  24);

part II of the Law of Turkmenistan dated 1st October 2007 “On Changes and Additions to Some Legislative Acts of Turkmenistan” (The Bulletin of Mejlis of Turkmenistan, 2007, No4, Art.   68);

part XIV of the Law of Turkmenistan dated 18th April 2009 “On Changes, Additions and Recognition as Invalid Some Legislative Acts of Turkmenistan” (The Bulletin of  Mejlis of Turkmenistan, 2009, No 2, Art. 33);

part two of Section I of the  Law of Turkmenistan dated 31st March  2012 “On  Changes and Additions to Some Legislative Acts of Turkmenistan”            (The Bulletin of  Mejlis of Turkmenistan, 2012, No 1, Art. 48);

part four of Section I of the Law of Turkmenistan dated 26th March 2016 “On  Changes and Additions to Some Legislative Acts of Turkmenistan”            (The Bulletin of  Mejlis of Turkmenistan, 2016, No 1, Art 71).

 


 

    President                                           Gurbanguly

of Turkmenistan                                   Berdymukhamedov

 

 

Ashkhabad

9 October 2017

No 620-V.