MALTA FREE ZONES ACT

CHAPTER 598

MALTA FREE ZONES ACT

AN ACT to provide for the regulation and administration of the affairs

of Free Zones in Malta with a view to fostering economic development and

the generation of employment in Malta and the determination and regulation

of undertakings authorised to carry on activities within any Free Zone,

without prejudice to the applicable provisions of the Import Duties Act and of

the Union Customs Code.

31st May, 2019

ACT XV of 2019.

The short title of this Act is the Malta Free Zones Act.

(1)

In this Act unless the contents otherwise

requires

"Commissioner" means the Commissioner for Revenue, and

includes any other person having an express or implied authority to

act for the said Commissioner in carrying out the provisions of this

"determined undertaking" means an undertaking determined as

authorised to operate within a Free Zone under article 9;

"Free Zone" means an area in Malta designated as a Free Zone

in accordance with the provisions of article 3 and referred to in any

Schedule to this Act;

"guidelines" means any set of rules issued by the Authority

from time to time for the further implementation of the provisions of

this Act and of any regulations issued hereunder;

"Minister" means the Minister responsible for Malta

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Enterprise;

"State Aid Monitoring Board" means the Board established

under article 57 of the Business Promotion Act;

"undertaking" means any individual or body of persons,

whether having a distinct legal personality or not, who or which

carries on any form of enterprise including the exercise of any trade

or business, profession or vocation and includes any association or

other body of persons which promotes or supports the goals and

objectives of such undertakings;

"Union Customs Code" means the Union Customs Code

adopted on 9th October 2013 as Regulation (EU) No. 952/2013 of the

European Parliament and of the Council as amended by Regulation

2016/2339 and as may be further amended from time to time, as well

as any other delegated legislation issued to supplement such

legislation.

(2) Any reference in this Act to any law or provision

thereof, shall be construed as a reference to that law or provision as

from time to time in force and shall include a reference to any

enactment replacing such law or provision (including the imposition

of any taxes whatsoever analogous to or in substitution to those

contained in such enactments or provisions) and to any subsidiary

legislation made thereunder.

(3) Words and expressions used in this Act with reference to

another law shall, so far as necessary to give effect to this Act, and

consistently with the provisions thereof, have the same meaning as

they have in the law with reference to which they are used in this Act.

(4) In this Act and in any regulations made thereunder, if

there is any conflict between the English and Maltese texts, the

English text shall prevail.

PART II

Free Zones

(1)

The areas or parts of Malta designated by the

Minister responsible for Customs as Free Zones shall, for all intents

and purposes of this Act and of any other law, be designated for use

as Free Zones in terms of the applicable provisions of the Import

Duties Act and of the Union Customs Code or any substituting or

supplementing legislation as may be applicable from time to time

Provided that the provisions of this Act shall not apply

to any area of Malta designated by the Minister responsible for

Customs as a Free Zone and which is specifically governed by any

other enactment.

(2) The applicable provisions of the Import Duties Act and

of the Union Customs Code or any substituting or supplementing

legislation as may be applicable from time to time shall govern the

operation of any Free Zone and the activities that are carried out

therein.

Except as otherwise provided in this Act, the provisions

of the Government Lands Act shall not apply to any land as defined

in article 2 of the said Act when such land is situated within a Free

Zone.

PART III

Free Zones Authority

(1)

Without prejudice to the authority vested in the

Commissioner in terms of sub-article (2), and in terms of the Import

Duties Act, any legal person from time to time designated to act as

such by the Minister shall constitute the Free Zones Authority,

hereinafter in this Act referred to as "the Authority", until such time

as such authorisation is revoked by the Minister.

(2) The Commissioner shall be vested with all powers

conferred thereon in terms of the Import Duties Act, including among

others

(a)

supervision of the perimeter of each Free Zone

and the entry and exit points thereof;

(b)

control and supervision over persons, goods and

means of transport entering or leaving each Free Zone;

(c)

approval and supervision of the construction of

any building in any Free Zone;

(d)

the right to be presented with goods brought into

a Free Zone and the authority to subject such goods to the

prescribed customs formalities, where so required in terms of

the Union Customs Code;

(e)

establishment of customs status as Union goods

when goods enter a Free Zone, when they have undergone

processing operations within a Free Zone or when they have

been released to free circulation in a Free Zone;

(f)

any other functions of control and supervision

vested in the customs authorities of member states of the

European Union in the context of Free Zones in terms of the

Customs legislation of the European Union.

(3)

It shall be the duty and function of the Authority

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(a)

to administer the affairs of each Free Zone with a

view to fostering economic development and the generation of

employment in Malta;

(b)

to authorise and regulate undertakings

authorised to carry on activities within any Free Zone, and to

determine the activities which such undertakings shall be

allowed to carry on within any Free Zone;

(c)

to provide and manage land, sites, premises,

services and facilities for undertakings authorised to carry on

activities within any Free Zone;

(d)

to liaise with all Ministries and departments of

Government and all bodies and other authorities established by

law in the carrying out of its functions and responsibilities in

terms of law;

(e)

to advise Government on all matters relating to

Free Zones;

(f)

to issue guidelines to supplement the provisions

of this Act and of any regulations made thereunder;

(g)

to do all such other acts as may be necessary or

conducive to the attainment of any or all of the said objectives.

(4) Without prejudice to the generality of the provisions of

sub-article (3), the Minister may vest the Authority with such other

supervisory and executive powers, and may impose on the Authority

such conditions, obligations and restrictions as to him may seem

necessary for the proper and fruitful establishment, development,

maintenance, operation, management, control and conservation of

Free Zones.

Without prejudice to the generality of the powers

conferred upon the Authority by this Act, the Authority may

(a)

do all such acts as may be necessary or

conducive to the attainment of the objectives, duties and

obligations thereof;

(b)

enter into discussions and agreements with

undertakings that seek to be authorised to operate within a

Free Zone, in accordance with the provisions of article 5;

(c)

acquire, sell or otherwise dispose of, or allocate

by title of lease, concession or other title valid at law, or

otherwise make available for use, areas, spaces, warehouses,

factories, wharves, and any other property, facility or structure

which may be available in the territory designated as a Free

Zone, as well as plant, machinery and equipment as the case

may be, on such terms and subject to such conditions as the

Authority determines appropriate, so however that, in all

cases, such terms and conditions shall be established in

accordance with market rates

Provided that the Authority may, with the

approval of the Minister, create servitudes and other similar

rights over areas comprised within a Free Zone in favour of

any land outside the Free Zone whenever such rights are

required for the proper use of such land;

(d)

manage and develop land, carry out works

thereon and maintain works or assist in their maintenance;

(e)

authorise the carrying on of any activity within a

Free Zone;

(f)

impose restrictions or prohibitions on the

activities that may be carried out by authorised undertakings,

having regard among others to the nature of the particular

goods or services, the requirements of customs supervision or

security and safety considerations;

(g)

exercise, perform, and discharge all such

powers, duties and functions as are by or under this Act vested

in or assigned or delegated to the Authority in respect of a Free

Zone and which are not reserved for the Commissioner in

terms of the Import Duties Act and the Union Customs Code;

(h)

determine the rents, charges, dues and other

levies to be paid in or in connection with any aspect of any

Free Zone or the services and facilities made available

thereunder, which dues and levies shall be established in

accordance with market rates, including, among others, fees

relative to the authorisation of undertakings to operate within a

Free Zone;

(i)

issue and publish guidelines from time to time to

make rules on any matter falling within its authority in terms

of this Act or any regulations issued thereunder, and not

reserved for the Commissioner in terms of the Import Duties

Act and the Union Customs Code;

(j)

do all such other acts as are incidental to or

consequential upon the exercise, performance and discharge of

its powers, duties, and functions under this Act.

(1)

The Authority shall, not later than six months

after the end of each calendar year, make and transmit to the Minister

a report dealing generally with the activities thereof during the

previous year and containing such information relating to the

proceedings and policy of the Authority as the Minister may, from

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time to time, require. The Minister shall cause a copy of every such

report to be laid on the Table of the House of Representatives as soon

as practicable.

(2) The Authority shall afford to the Minister and to the

Minister responsible for finance, full facilities for obtaining

information with respect to its property and activities, and shall

furnish them with returns, accounts and other information with

respect thereto, and afford them facilities for the verification of the

information so furnished in such manner and at such times as the

Minister may request.

(3) The Authority shall furnish to the Commissioner such

information and documentation as may be reasonably requested by

the Commissioner in carrying out his functions, duties and

responsibilities in terms of the Import Duties Act and the Union

Customs Code.

Where the Authority is satisfied that, in the case of an

undertaking determined as authorised to operate in a Free Zone, it

would be consistent with the aims and objectives of the policy under

which that Free Zone was constituted to do so, the Authority may

provide for the undertaking, industrial buildings, structures and land

owned directly or indirectly by the Government in a Free Zone,

including, on such terms as may be agreed, industrial buildings and

structures constructed or altered according to the requirements of the

relative undertaking and this for a term which shall not extend

beyond the term of the determination (original or extended) issued to

the undertaking authorising it to carry on activities within the

particular Free Zone. The provision of such buildings, structures and

land shall take place subject to such charges as the Authority may

determine, so however that in all cases such charges shall be

established in accordance with market rates.

PART IV

Authorised Undertakings and Permitted Activities

(1)

Undertakings shall only carry out in a Free Zone

a trade or business being principally -

(a)

the production or manufacturing of any goods,

materials, commodities, equipment, plant or machinery;

(b)

the assembly, testing, repair and, or maintenance

of any goods, materials, commodities, equipment, plant or

machinery;

(c)

the labelling, packaging, sorting, dividing,

warehousing, storage, exhibition, assembly and related

activities of or relative to any goods, materials, commodities,

equipment, plant or machinery, including where such goods

are acquired in bulk and are to be processed within a Free

Zone in preparation for their eventual sale or distribution;

(d)

any activity involving the provision of services

relative to or concerning logistics as may be approved by the

Authority;

(e)

the carrying out of any activities as may be

approved by the Authority during such time as goods are being

held in a Free Zone or in preparation for their eventual

transhipment;

(f)

any activity concerned solely with the conduct of

a Free Zone including, but not limited to, stevedoring,

wharfage, operation of terminals and container handling;

(g)

the rendering of services analogous or

complementary to the activities referred to in the above

paragraphs; and

(h)

the carrying out of such industrial, commercial

or service activity as may be prescribed by the Authority

through guidelines issued thereby; and the status as an

authorised undertaking shall be evidenced by the issue of a

document for this purpose. The granting of the status of

authorised undertaking to any undertaking shall be notified by

the Authority to the Commissioner as soon as such status is

approved and in any case prior to commencement of

operations by the authorised undertaking.

(2) No undertaking shall be granted an authorisation

contemplated by this Act unless its activities are, in the opinion of the

Authority, wholly or mainly carried on or exercised within a Free

Zone.

(3) For the purpose of sub-article (2), the following

activities carried on or exercised outside a Free Zone by an

authorised undertaking shall not be deemed to infringe the rule

therein set out

(a)

the management and administration of an

undertaking, its trade, business or property and the holding

thereof;

(b)

the execution of instruments, transactions,

negotiations or agreements relative to an undertaking’s trade

or business;

(c)

the transit of goods or their commodities to and

from a Free Zone.

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(1)

The Authority shall revoke the determination of

any undertaking authorised to operate therein, which carries on any

activity, or has income accruing to it or derived by it, which consists

of, or originates from any transaction, operation or other activity

which is a criminal offence under the laws of Malta, or would be such

an offence if carried out in Malta, or has received or has in its

possession or control money or other property the receipt, ownership,

possession or control of which is, or would be, such an offence as

aforesaid.

(2) Without prejudice to the application of any other law on

the subject, all income, money or other property as is referred to in

sub-article (1) shall be liable to seizure and shall be forfeited in

favour of the Government and become its property absolutely.

Subject to the provisions of the Union Customs Code, in

issuing determinations for operations in a Free Zone, the Authority

shall

(a)

have power to impose such prohibitions or

restrictions on grounds of public interest, public morality,

public policy or public security, the protection of human,

animal or plant health and life, the protection of national

treasures of artistic, historic or archaeological value, or the

protection of industrial or commercial property;

(b)

have power to require that goods which are

dangerous or likely to spoil other goods or which, for any other

reason whatsoever, require special facilities, be placed in

premises specially equipped to receive them.

(1)

No determination shall be issued to any

undertaking if the applicant undertaking is, in the opinion of the

Authority, engaged in any operations connected with such

commodities as the Authority may from time to time determine

through the issue of guidelines.

(2) No determination shall be issued to any undertaking

unless the said undertaking is occupying, under any title valid at law,

or is being allowed by the Authority to make use of immovable

property in a Free Zone whether on its own or in conjunction with

other authorised undertakings.

(3) The Authority may, with the concurrence of the

Commissioner, permit any person whomsoever to have access to and

operate in a Free Zone, even if such person cannot, for any reason

whatsoever, be an authorised undertaking if, in the opinion of the

Authority it would be useful, necessary or conducive to the better

development or functioning of a Free Zone that such person be

granted such access and be allowed to operate in the Free Zone.

The Authority may from time to time release certificates

as it may deem appropriate attesting that an undertaking, or an

undertaking in the process of formation, is, or will be, a determined

undertaking within a Free Zone, and such certificate shall be

conclusive evidence for all purposes of this Act, and for all related,

corollary or ancillary matters, to the effect that the said undertaking

is, or will be, so authorised.

PART V

Power to make Regulations and to issue Guidelines

(1)

Without prejudice to the applicable provisions of

the Import Duties Act and of the Union Customs Code and of any

rights of the Minister responsible for Customs and of the

Commissioner thereunder, in order to achieve the purposes of this

Act, the Minister may, in terms of this Act, make regulations to give

effect to the provisions hereof and, without prejudice to the generality

of the foregoing, such regulations may include provisions with

respect to

(a)

the establishment of policies for implementation

by the Authority as to the undertakings eligible to be

authorised to carry out activities within a Free Zone, to benefit

from any incentives and other arrangements, the types of

incentives, the range of support and other related matters;

(b)

the introduction of measures of a fiscal nature;

(c)

the introduction of such other support measures

as are considered appropriate and subject to such conditions as

the Minister may deem fit, which measures may include, but

shall not be limited to, the measures provided for in article

4(3);

(d)

the making of such provisions relative to the

structure,

management,

functions,

powers,

duties,

accountability, operations or any other matter as he may deem

fit, relative to the Authority, to any person designated to act as

such as well as its personnel, assets, liabilities or otherwise;

(e)

the definition and interpretation of terms and

concepts to be used in regulations and guidelines;

(f)

the deletion or the transposition of any

provisions in the relevant legislation into regulations with such

modifications as the Minister may consider appropriate or

necessary.

(2) Where the Minister proposes to make or modify

regulations in accordance with the provisions of this Act and those

regulations provide that an undertaking may benefit from any

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measures of a fiscal nature as set out in sub-article (1), the power of

the Minister to make such regulations shall only be exercised with the

concurrence of the Minister responsible for finance.

(3) Where the Minister proposes to make or modify

regulations which provide for the granting of any assistance, a copy

of such proposed regulations shall be forwarded to the State Aid

Monitoring Board which shall communicate its opinions on the

proposed assistance in accordance with applicable law.

(1)

For the better carrying out of the provisions of

this Act, the Authority may, in furtherance of any of its functions and

powers, from time to time

(a)

issue and publish guidelines to establish inter

alia

(i)

the terms and conditions of any

arrangements, incentives or schemes including the

determination of rules for the eligibility of undertakings

to any benefits and incentives under any such schemes

and all matters related and ancillary thereto;

(ii) the applicability of such schemes to

particular projects or undertakings; and

(iii) any additional requirements and

conditions in relation to activities of undertakings, the

conduct of their business, their responsibilities to the

Authority, reporting requirements to the Authority,

financial resources and related requirements, and any

other matters as the Authority may consider appropriate;

(b)

pursuant to a delegation by the Minister by

means of a relevant regulation, transpose any provisions in the

relevant legislation into guidelines with such modifications as

the Minister or the Authority, as the case may be, may consider

appropriate or necessary.

(2) Guidelines shall be binding on all authorised

undertakings and on other persons as may be specified therein in

accordance with their terms.

(3) Where any guidelines deal with measures of a fiscal

nature, the concurrence of the Minister responsible for finance shall

also be required.

(4) Except for any new guidelines or amendments to the

guidelines which are purely administrative in nature, and are

expressly declared to be so by the Authority, which come into force

immediately upon the posting thereof on the official website of the

Authority, amendments to existing guidelines shall come into force

on the lapse of fifteen days after they are posted on the official

website of the Authority or on such later date as may be stated

therein

Provided that an amendment to any guidelines may not

reduce, withdraw or cancel any benefit previously granted except in

accordance with the terms of this Act or a regulation in terms of

which it is issued.

(5) Where the Authority proposes to issue or amend

guidelines, which provide for the granting of any new or increased

assistance, a copy of such proposed guidelines or amendments

thereto as the case may be, shall be forwarded to the State Aid

Monitoring Board, which shall communicate its opinions on the

proposed assistance in accordance with applicable law.

(1)

Notwithstanding any provisions of the Income

Tax Act or of any other law, incentives, benefits and grants in terms

of schemes that may be made applicable by the Authority to give

effect to this Act, shall be exempt from tax in the hands of the

relevant beneficiary, provided that such aid does not take the form of

income substitution.

(2) The Minister may make regulations to lay down the

conditions relating to accounting, record keeping and reporting to the

Authority for the enjoyment of the incentives, benefits and grants laid

down in sub-article (1).

(3) Where any benefit provided by this Act or by

regulations made thereunder is due to a partnership or other

undertaking and, in accordance with the Income Tax Act or any other

applicable law, the partners or members thereof and not the

partnership or undertaking itself are assessable to tax on any income

of such partnership or undertaking, any benefit provided in terms of

this Act to a partnership or undertaking shall be due to the partners or

members of any such partnership or undertaking.

PART VI

General Provisions

The provisions of this Act and of any regulations or

guidelines issued thereunder shall be interpreted in the light of

applicable European Union legislation regulating State Aid and

related matters and no person shall receive any benefit in terms of

this Act and of any regulations or guidelines issued thereunder which

exceeds those allowed in terms of such European Union legislation.

The provisions of articles 28 to 37, both inclusive, of the

Malta Enterprise Act shall apply mutatis mutandis in the context of

the provisions of this Act, so however that references in those articles

to "the Corporation" shall be interpreted in the context of this Act as

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being references to "the Authority".