The General Commission for Free Zones POSITIVE

The General Commission for Free Zones

POSITIVE REASONS OF PROMULGATION `It is desired to push the development of economy and social progress and urge same forward through attraction of home capitals, as well as Arabian, foreign and industrial investments capitals from the developed countries. This will assist to enter the developed technology and create new opportunities for working class and increase the volume of exportations and income of foreign currency. The administration of investment of Free Zones, taking into consideration that this investment is Iraqi investment, will serve national purposes in addition to Arabian and international purposes under Iraqi bases and administration, This law was promulgated.

According to the Rules and regulations of Para. (2 nd) of Article No. (9) of General Board Law for Free Zones No. (3) for the year 1998, we have issued the following instructions

NO. (4) FOR THE YEAR 1999 INSTRUCTIONS ADMINISTRATION OF FREE ZONE AND SYSTEMIZING THE BUSINESS OF INVESTORS INSIDE FRAMEWORK OF THE ZONES Article No. (1): • The industrialist or Trader or employer exercises his business in the Free Zones after he has obtained the License of investment issued by the Free Zones Board. • The following is a condition in granting a License: First- Who demands a License shall submit an application, in accordance with the two attached specimens to these Instructions, to the General Manager of General Board of Free Zones. His application must include his desire to erect his project. Second- Attach the amount of USD. 100/- (USD One-Hundred) to his application. This amount is unreturnable.

Article No. (2): • The investor shall be notified that he has been granted a License for completion of rental procedures and to sign the investment contract during (30) days, (Thirtydays). The date of signing the contract shall be the conception date of the rent. • Should the investor be desirous to erect constructions specified for himself he must be given a term of (30) days (Thirty-days) for submission of plans and technical specifications prepared by a consultant engineer who has been locally registered and must obtain the approval for same and to be credited. • The investor shall commence the erection of construction of the project during (90) days (Ninety-days) with effect from the date of approval of same. In case he does not commence work on that day, then it is possible for the General Manager to grant him another (90) days (Ninety-days). In case he does not start, than he is considered to have breached the conditions of the contract and consequently Article No. (10) must be applied against his rights. • The investor must be obliged to execute the plans and the Technical Specifications through a legally Licensed contractor and under supervision of a consulting engineer credited by him (investor) and to follow-up the engineering Section at the General Board of free Zones.

Article No. (3): The General Board for Free Zones shall keep and hold the following registers: • Register to record the industrial projects. • Register to record the commercial projects. • Register to record the service projects. Article No. (4): • The administration of Free Zones shall undertake to limit the working hours in the area, between sunrise and sunset. The manager of Free Zone shall permit to work in other hours during the official holidays provided that this must not involve permission for clearance of goods from the Free Zones after the sunset or in the official holidays unless by approval of the Free Zone manager and the Area Customhouse Manager. • The administration of Free Zone shall undertake to control entering of investors, clients and workers to the Free Zone with the means of their transportation in accordance with the clearances issued by said administration. • The Manager of Free Zone shall prevent any person to enter the Free Zone for a term of time not to exceed (30) days (Thirty-days) in case of any breach of the contract conditions stated in Para. (B) of the term of time exceeds the period then the case shall be raised to the General Manager to decide the suitable period for prevention according to status of breach committed which caused such prevention.

Article No. (5): The Customhouse Department shall undertake to exercise its duty in accordance with the Rules of Chapter Four of Custom House Law No. (23) of 1984 relating to the Free Zone main entrance and outdoor as well as the Customhouse ground specified in the Free Zone. Their officials have the right to inspect the persons and the transportation means entering and exiting from the Free Zone. It is possible for them to enter for purpose of inspection and checking by a written order from the Free Zone Manager with co-ordination with the administration of the Free Zone and the concerned person. Article No. (6): • The carrier or marine representative, prior to entering of the good into Customhouse Stores available outside the Free Zone, shall register such goods in the records specified for this purpose. He (the carrier) can alter the trend of such goods to the Free Zone, provided that no change take place to the property when altering the trend and the values of goods transferred should not be in accordance with the instructions of Central Bank and Control of Foreign Currency. • It is possible to transfer the goods from Free Zone to another Free Zone inside Iraq. This could be done according to the announcements of transit and as per procedures of transferring goods from one Custom House Center to another Custom House Center.

Article No. (7): It is not permitted to enter or consign goods into the Free Zone unless an approval of the administration of Free Zone is obtained indicating legal documents or waybill approved by the Custom House Center. Article No. (8): • The goods entering the Free Zone shall be treated as transit goods. • Arrival of goods to the beginning of Free Zone and their entry is considered as these have been cleared out of Iraq. The transit guarantees shall be cancelled at the Custom House upon arrangement of a request of consignment and receiving same legally from the Free Zone. The Free Zone shall undertake to furnish the Custom House Centers, through which the goods were entered every day, with copies of applications of entry and clearance relating to those goods.

Article No. (9): When the goods are entered into the Free Zone, an application must be prepared for consigning the goods in accordance with the specimen decided for purpose of conforming the contents with the statement of transfer and the manifest relating to the goods. Article No. (10): No certificates of origin for entry of goods into the Free Zone or original bills of analyzing or checking of quality, shall be demanded. The bills of loading or shipping documents will suffice, such documents shall be demanded when clearance of goods from the Free Zone to be put for local consumption, are demanded. The documents issued by the manufacturers and investors in the Free Zone approved by the administration of the Free Zones are credited. These documents are considered documents issued by the original source for completion of the documents at Custom House. This shall be done when the tax of such goods is paid and has been put for local consumption.

Article No. (11): The agency owners of steamers and truck drivers shall hand-over to the Free Zone Authority and the Customhouse Center within (72) hours from the time of arrival of transport means, prior to their off-loading, an original copy of the manifests and shipping policies as well as the descriptions relating to goods in transit. Depositors or their representatives shall commence to off-load the transportation means, without delay, and deliver the goods to the Free Zone Authorities. Article No. (12): Shall submit an application to the Manager of Free Zone to obtain approval of consignment. As soon as approval is obtained shall revert same to the supervisor of storages to appoint the location specified for storage of goods. The concerned storage secretary shall commence receiving the goods.

Article No. (13): The consignors, prior to delivery of the goods, must undertake to separate the parcels in accordance with their trade marks and their Nos. during (5) days (Five -days) with effect from the date of arrival of goods to the Free Zone. In case of failing to do so then they must pay all expenses occurred to the Free Zone for separation adding to the said amount (10 %) (Ten percent) as a payment of services. Article No. (14): The investor shall hold specific legal registers relating to the movement of goods to facilitate supervising and controlling operation of the goods conforming same with the registers relating to the Free Zone.

Article No. (15): Upon receiving the goods shall undertake to separate the damaged or suspected packages. After that they should be checked and put in new packages on the expenses of the consignor. Then shall write down a statement for same and this statement shall be considered a part of delivery statement. These packages shall be put in the damaged materials and with the suspected materials in the store until necessary procedures are taken in this concern in accordance with the Rules and Regulations.

Article No. (16): A. The goods shall be received and delivered, whether in entering or clearance as stated below: First- Goods imported in sacks which the quality cannot be counted, wood and steel (solid goods) it is permitted to enter them by a committee formed according to a request from the consignor. This permission shall be approved by the Manager of the free Zone. These goods shall remain under the responsibility of consignor during the entire period of their storage until they are cleared up under supervision of the committee which represents the concerned parties. A minute report in this concern must be arranged. Second- The goods of similar units to be handed over in Nos. and weight on the basis of container. Third- Other goods to be delivered in Nos. without weight. B. Receiving of goods shall be in accordance with Para. No. (1) of this Article. The handing over shall be a minute report, to be prepared accordingly, to be signed by consignor, storekeeper and Custom House official. This minute report shall be signed by Free Zone Manager. Should the consignor objects to sign, then he can claim his objection to the manager within a period of one week from the date of preparing the minute report. No procedures for amendment in the minute report are accepted unless on the bases of constant facts to be approved by same parties who signed the minute report, provided that this be approved by the manager of Free Zone.

Article No. (17): The particulars of goods shall be observed with their nature and their effect by weather factors, as well as other situations which are imposed to be effected by weight when shortage take place in weight or difference in their contents. The Free Zone is not binded responsible for that shortage unless a constant evidence is proved that there was a confusion inside the building of the Free Zone.

Article No. (18): A. The Manager of Free Zone has the right to decide to transport the goods, which show indications that they are in contradiction with the present descriptions or they are hazardous source to the goods stored beside them or harmful to general health or environment or establishments of Free Zone, to any place inside the Free Zone or outside it. The Manager shall notify the consignor of this procedure. The transportation expenses of such goods shall be on the responsibility of the consignor. B. The Manager shall undertake necessary arrangements needed for goods to be protected. He shall do the repackaging of the damaged goods or repair them and the expenses shall be borne by the consignor whenever he sees this is necessary. C. If the consigned goods are exposed to rapid damage or caused by damage or for other reasons and the rapid damage becoming greater, the Free Zone Manager must notify the consignor to withdraw them within a period to be fixed by the manager of Free Zone, otherwise the manager will make decision to sell them by auction sale or to destroy them against a minute report to be signed by the concerned parties. The Free Zone office has the right to ask the proprietor of goods to pay back the expenses of destroying, in case the selling charges do not suffice to cover selling expenses and payments.

Article No. (19): A. The consignor must clear up the remains and residues during a period of (30) days (Thirty-days). If he fails to do so, then these shall be sold by order of the manager by auction sale or shall be destroyed in accordance with the situation. The consignor is obliged to pay back the expenses, collect them and register their value to the interest of the Board of free Zone. B. In case it is not possible to know the consignments relating to the remainder of goods and knowing not the owner of the goods within (30) days (Thirty-days) the manager shall issue an order to sell the remainder of goods stated in the auction sale or to destroy them in accordance with the situation. The income of selling shall be reverted to the General Board as these are considered abandoned properties.

Article No. (20): It is possible to transport the goods from storehouses and the area grounds of Free Zone to the places rented to the investors after they pay the debts due on same. The transportation shall be on account and responsibility of the investor or consignor. This will be done after submission of declaration of transportation in accordance with the specimen for this concern and obtaining approval of the Free Zone Manager in this respect. The registers of Free Zone shall be marked to indicate the procedures. Also it is permitted to transport the goods from the rented place to the stores and Free Zone ground according to the arrangements indicated in this Article No. (21): The Manager of Free Zone shall permit the clearance of equipments, tools, machines and materials entered in the statements, and establishments operating in the Free Zone to enter inside Iraq for purpose of maintenance and return same against a statement showing clearing up out of the Free Zone as per specimen made for this purpose.

Article No. (22): The Manager of Free Zone shall permit of entry of equipment, tools and machines to the Free Zone for purpose of repairing and return against a statement showing clearing up out of the Free Zone. After repairing accordingly, payment of income tax or payments charged for repairing in case additional tools or instruments subject to custom taxes. Article No. (23): The General Manager shall agree that he, investor, may disclaim his rights in the rented place to other party, provided that investor shall effect disclaiming payment of USD. 500/- (USD. Five-Hundred only) as well as payment of services within the investment contract. It is not possible for investor to disclaim the constructions he erected for other party. The property of this constructions shall be reverted to the Board of Free Zone unless the lessee is interested to renew the contract for a period which he sees it suitable, provided that the General Manager has agreed to the said renewal. A new contract shall be signed and presented to the concerned official and shall be subject to all conditions of the First contract for the remaining term of the contract. These conditions shall be applied when the partners wish to disclaim to each other, or when a new partner is added to the contract of investment.

Article No. (24): An application for clearance of goods from the Free Zone shall be arranged in which all specifications of goods shall be mentioned and to be signed by the Free Zone official as well as the investor or consignor. The payment is to be arranged for goods specified in the schedule of payments. According to that application a statement of transit at the Central of Custom House shall be arranged. The goods shall be loaded on the transportation means to be prepared by the investor or the consignor official. The goods shall be forwarded to Custom House Courtyard for completion of procedures of descriptions of transit from Custom House. Article No. (25): If the goods were directed to internal consumption then an application for clearance should be submitted, signed by the Free Zone official and the investor or consignor. A statement shall be prepared showing putting same for consumption to be registered in the Central Custom House. The Custom House procedures shall be completed (such as estimation, analyzing and import licenses …etc).

Article No. (26): A. When discovering any breach to the Rules of the General Board of Free Zone Law No. (3) for the year 1998 or to the Rules of Custom House Law No. (23) of 1984 or the instructions issued therefore, a minute report shall be prepared by the concerned official who has discovered the breach in accordance with the Rules of Article No. (229) of Custom House Law. Full details shall be put down in the report indicating the breach of the contract to be signed by the official and submit same to the Manager of Free Zone for approval. The concerned person shall be notified of this breach of contract. B. The minute Report shall be referred to the Custom House Center at the Free Zone to take legal action in respect of the said infringement in accordance with the Custom House Law No. (’ 23) of 1984. C. Rewards to the persons, who discovered the infringement and assisted them in completing their procedures among the officials of Free Zone. Such rewards are given by virtue of texts stated in the Custom House Law No. (23) of 1984.

Article No. (27): The Board of Directors of Free Zone shall discuss any case not treated by these instructions. Article No. (28): These instructions shall be put in force with effect from the date of publishing them in the official Gazette.

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