Parliament approves tax concessions for Special Economic Zones
The bill was debated and passed during Wednesday’s sitting, receiving 46 votes in favour and 10 against.
Parliament has passed a bill amending the Special Economic Zones (SEZ) Act to provide tax concessions for investments in designated zones.
The amendment was proposed by Baarah MP and PNC Parliamentary Group Deputy Leader Ibrahim Shujau on behalf of the government on 20 October. The bill was debated and passed during Wednesday’s sitting, receiving 46 votes in favour and 10 against.
According to the amendment, the objective is to revise the SEZ law to define the terms and conditions necessary to designate an SEZ as a “sustainable township.”
Under the bill, a sustainable township is defined as a large-scale real estate or integrated tourism development within a specific management zone, providing residential areas, infrastructure, and public services designed to support long-term sustainability.
The bill outlines several conditions for establishing such developments, including:
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A minimum investment of USD 500 million;
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Creation of a large-scale real estate project featuring luxury tourism and residential facilities, or an integrated tourism development with similar services;
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Establishment of an international-standard hospitality training centre and an international health service centre;
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Development of self-sufficient infrastructure for energy generation and waste management, with at least 60 percent of energy sourced from renewable means;
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Development of agricultural or co-agricultural facilities aimed at reducing food imports and supporting domestic production;
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Provision of on-site amenities, including housing, educational institutions, healthcare, and recreational facilities.
The amendment also introduces tax concessions for developers and investors in such zones. These include:
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Lower property tax rates for strata-based villa transactions: 1 percent on the first transaction, 2 percent on the second, and 4 percent on subsequent sales;
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Income tax relief under the Income Tax Act, with a 5 percent rate for the first ten years, increasing to 10 percent for the following ten years, and thereafter aligned with general service rates;
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Exemption from import duties on capital goods brought in for development within the zone.
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