Establishment of Investment Logistics Area and Issuance of License to Practice Activity
Description and Purpose of the Process
These procedures apply to the SCZone projects, and its employees or agents authorized by the validity of a bank signature in favor of the project to finalize the procedures for issuing a license to practice the activity of investment logistics area. All information related to such process and the necessary procedures are provided for the projects to comply with when submitting a request for approval on the establishment of logistics area in the SCZone.
Process Diagram
Key Steps of Work Procedures
Submitting a request to get the General Authority for the Economic Zone’s approval on establishing the project and obtaining a license to practice activity.
Completion of inspection procedures by the committee composed of the Customs and SCZone Authorities’ representatives to check the site readiness for the project.
A joint decision is taken by the Customs and SCZone Authorities to issue the project’s license.
Issuance of the project’s license from the SCZone Authority to start practicing activity after fulfilling the logistics areas’ quality control requirements.
Regulatory Requirements and Controls
1
A valid commercial register
2
Tax card
3
The company is registered at the Customs Stakeholder Unit, by virtue of a letter submitted by the SCZone Authority
4
Prior approval issued by the SCZone Authority board of directors on project establishment
5
A joint licensing decision taken by the Customs and SCZone Authorities
6
Valid license to practice activity issued by the SCZone Authority
Shipping and Commercial Supporting Documents
Authority’s approval on project establishment
A joint licensing decision taken by the Customs and SCZone Authorities
Registration number in the register of the Customs Stakeholder Unit
Statement proving the fulfillment of logistics areas quality control requirements
A surety to cover customs tax and all types of due taxes and fees for the loss or damage of stored goods. The surety can be in the following forms
- Cash Guarantee: The financial guarantee usually represents a percentage of (15%) of maximum taxes imposed and other taxes due for goods stored in the site.
- Unconditional and irrevocable bank guarantee letter
- Insurance policy issued in accordance with the form approved and requested by the Customs Authority including the due taxes and fees. It shall be due once requested by the Customs Authority or the SCZone Authority with no consideration to the concerned party’s objection, provided that this shall be referred to in the policy.
SCZone Authority Procedures
1. The project or company representative shall submit a request to get the SCZone Authority’s approval on project establishment and registering the project activity in the commercial registry as storing and operating of logistics areas
2. The project’s representative shall submit a request to the SCZone Authority to obtain the license to practice activity using the related form through the SCZone Trade system, including all information and coordinates on which the project will be established, in order to start the licensing and inspection procedures by a committee of representatives of the Customs and SCZone Authorities to check the readiness of the site for establishing the project and its fulfillment of the quality control requirements, and acquisition of the necessary licenses (engineering, environmental, etc. )
Customs Procedures in the SCZone Customs Complex
1. The committee inspects the site to check its readiness to establish the project and its fulfillment of quality control requirements and controls to practice activity
2. A joint licensing decision is taken by the Customs and SCZone Authorities for the project that defines the activities to be carried out in the warehouse and the nature of goods to be stored (industrial – food – full goods containers – empty goods containers) with the aim of checking the condition of the warehouse and preparing it in accordance with the type and nature of goods, storage requirements and the availability of equipment and devices to implement this
3. A license to practice the project’s activity is issued by SCZone Authority to start the actual practice and its time is defined
4. The project is registered in the Customs Stakeholder Unit application in the SCZone logistic center
Operational Requirements and Controls
- It is permissible to expand or modify the coordinates of the logistics area through an appendix to amend the joint decision issued by the Customs & SCZone Authorities. No change shall be made to the logistics area location or its area unless after notifying the SCZone Authority and obtaining a decision on such modification
- Adherence to all regulations and decisions issued by the SCZone Authority and compliance with all provisions of the Customs law and its executive regulation for matters for which no specific provision is laid down in the executive decisions of SCZone customs system.
- Adherence to the applicable customs procedures and controls and bearing responsibility for any violation by the company’s workers and employees of these procedures.
- The competent customs unit shall have the right to review the documents, records, correspondences, and commercial contracts of any type, and the operating company shall keep any documents for a period of no less than (5) five years from the completion of custom operation.
- The logistics areas are subject to the control of the SCZone Authority, and the logistics areas operators are responsible for the goods deposited in their areas in accordance with the provisions of the laws in force. The investors shall be responsible before the SCZone Authority’s board on behalf of the goods owners for all their obligations related to the goods deposited
- If any shortage appears in the goods deposited in the logistics area for any reason, the investor shall be responsible for such shortage before the SCZone and Customs Authorities, and the investor shall pay the customs duties due for the missing goods. in addition to being subject to the provisions of the general law of (violations and penalties).
- In the event that the goods stored in the logistics area are damaged as a result of natural disasters or force majeure, the SCZone Authority can re-evaluate the goods for the purposes of collecting customs taxes
- In the event that the goods stored in the logistics area are damaged as a result of negligence by the investor, customs taxes shall be due for the value of the goods as of the date of their deposit in the logistics area
- The investor shall cooperate with the customs team in charge of direct supervision of the goods and logistics area through their commitment and adherence to the instructions issued to them by such team, which are necessary for proper functioning of the logistics areas
- The site of the logistics area shall not be used for any purpose other than the licensed for one, except after obtaining a written approval from the SCZone Authority
- The licensed warehouse operator to exploit the warehouse shall not submit the customs declaration and transfer goods for deposit in the warehouse before obtaining the approval of the SCZone using the related form. This is for commercial statistics purposes, and to confirm that there is no violation from the licensee side, considering that the SCZone Authority approval is not an undertaking by the Authority to guarantee taxes and fees on the goods
- Foreign goods that are not free of customs tax shall be transferred to logistics areas established in the SCZone under the transit system and in accordance with the financial guarantees provided for in the Customs Law only, and which are provided for the benefit of the Customs Authority exclusively. No other type of government guarantees or commitments regarding the storage of goods in logistics areas shall be considered
- On transferring a consignment from the port to the logistics area, the goods of one customs declaration shall not be splitted, and it shall be transferred completely to one logistics area
- It is permissible to complete the customs procedures on the goods after they are transferred to the logistic area through the customs committees supervising the logistic area
- When exchanging and releasing the goods deposited in the logistics area, one bill of lading may be splitted to an unspecified number for the duration of the authorized storage period, provided that the joint licensing decision issued to the logistics area stipulates these procedural advantages and the decision number of the board of directors or its delegate in this regard
- It is prohibited to store used cars imported for the Disabled inside the logistics area, provided that the regulations issued by the SCZone Authority regarding cars for the disabled when entering the local market shall be applied in accordance with the SCZone Authority board of directors’ decision No. (52) of 2021
- The SCZone Authority, in accordance with the laws and decisions in force, may take what it deems appropriate for goods whose disposal cannot be ascertained during the inventory process conducted by Authority’s employees
Control & Governance Requirements for SCZone Investment Logistics Area
- The logistics areas shall fulfill the quality control requirements and shall comply with the import and export rules of SCZone regulations or with the rules of the general import and export law in case not mentioned in the SCZone ones.
- The project shall be surrounded by a safe fence from all sides and suitable gates to control entry, and shall have special main entrances, provided that these fences and buildings are tightly closed.
- If a license is issued for various storage activities within the coordinates of the same logistics area (for the interest of others/for the investor’s interest/tax exempted/ tax suspended), each activity shall be separated from the other by separate fences, walls, and entry and exit gates.
- The project shall have yards in which customs procedures can be completed (unloading – detection – handling – …).
- The project shall be equipped with all services and equipment for occupational health and safety and civil defense procedures, in order to secure the necessary equipment to maintain the safety of the deposited goods to prevent the causes of damage or fire and to facilitate the process of downloading, loading, and storing goods of all kinds.
- The engineering office and the competent customs department, each within its jurisdiction, shall ensure that all necessary requirements are met in the logistics area.
- The logistics area design shall comply with the engineering designs approved by the SCZone Authority in a way that enables the competent customs department to make inventory at any time in accordance with an appropriate inventory management system.
- Equipping the logistics area with digital surveillance cameras according to the needs that the SCZone Authority and the competent customs department see.
- The logistics area shall contain service facilities, offices and places equipped to carry out customs procedures for the goods entering the logistics area from the moment they enter the logistics area until they are exchanged for export.
- Adherence to the procedures and instructions on linking logistics areas to the SCZone Customs System, to follow up the storage process, entry and exit of goods to and from the logistics area, provided that the SCZone Authority shall be provided with the following:
- A statement signed by the legal representative of the project every six months of the imported materials and goods from outside the country that have been stored in the logistics area in terms of type, number and value according to the invoices related to the goods when they are received at the logistics area.
- A statement every six months of the materials and goods that have been exchanged from the logistics area in terms of type, number and value according to the invoices related to the goods when they are received at the logistics area.
- An annual statement of goods and materials that are still being deposited in the customs warehouse and have been imported from outside the country.
- A statement of the goods deposited into the warehouse that have been imported from the local market and a statement of what has been exported from them, and the remaining balance as requested by the competent customs office.
Related Important References and Resources
- Law No. 83 of 2002 on Economic Zones of a Special Nature
- SCZone Authority Board of Directors Decision No. 52 of 2021
Explanatory Questions and Answers
The SCZone Authority issues this license for the concerned project after a joint licensing decision is taken by the Customs and SCZone Authorities.
It includes closed stores, open and equipped storage yards, and cold (freezing) stores, with the purpose of receiving general finished goods and performing the next activities on them: maintenance, sorting, packaging, and other logistical activities complementary to their processing or any work added to these goods without resulting in any change in the customs tariff category of these goods upon releasing these goods into the country, with the obligation to provide an acceptable customs surety to cover all taxes and fees due.
The types of investment logistics areas in the SCZone include:
- Logistics areas for express shipping service and e-commerce companies
- Logistics areas for international courier companies and international airlines
- Logistics areas for the RORO berths outside the port or at storage sites for the transit car trading companies to take advantage of the RORO berths in the SCZone ports and their advanced capabilities
- Specialized logistics areas for international and global shipping lines companies
- Specialized logistics areas for bunkering companies and projects (with petroleum products and others)
The goods storage period in a licensed logistic areas is within the range of two years, which the SCZone Authority may extend for justified reasons, and in a manner that does not conflict with the validity periods governing these goods according to the nature of the item.
The SCZone Authority shall collect the amount of fifty thousand pounds annually from the project for the benefit of the Customs Authority in return for observation.
The guarantees provided by the project shall be one of the following:
- Cash Guarantee: The financial guarantee usually represents a percentage of (15%) of the maximum taxes imposed and other taxes due for goods stored on the project site.
- Unconditional and irrevocable bank guarantee letter
- Insurance policy issued according to the form approved by the Customs Authority including the due taxes and fees. They shall be due once requested by the Customs Authority and SCZone Authority with no consideration to the concerned party’s objection, provided that this shall be referred to in the policy.
