New findings????????????????????????????????????
Global Minimum Tax and Special Economic Zones
The International Institute for Sustainable Development (IISD)'s new policy brief
highlights that the prevalence of tax incentives use in SEZs will likely be impacted by changes in the international tax landscape, particularly the Global Minimum Tax (GMT). In the 140 countries that agreed to the OECD initiative, multinational enterprises (MNEs) currently enjoying tax incentives may see their corporate income tax rise to 15%. In addition to the GMT, other existing initiatives are also intended to address tax competition, including the OECD's Harmful Tax Competition Report, the Action 5 Report, and the Forum on Harmful Tax Practices.
These initiatives prompt SEZs to review the current use of tax incentives. In doing so, SEZs also need to maintain a predictable investment environment and mitigate potential legal risks, especially investor protection measures stipulated under bilateral investment treaties.
To maintain sustainable investments, the IISD makes the following recommendations to SEZs:
- Stronger coordination between SEZ, investment, and tax policy-makers
- More targeted incentives for sustainable development and clean energy goals
- Greater use of non-fiscal incentives
Research has found that the impact of tax incentives for investment attraction in SEZs are short-lived, and success of zone programs hinges on high quality institutions and effective program designs. To take a closer look at options faced by SEZs in early GMT adopter countries, check out our ASG Analysis on Vietnam
and Costa Rica
.?
?SEZ project developments
- Ukraine: Kyiv has one of the largest networks of industrial parks in Ukraine, with twelve registered projects. These include a Green Industrial Park in Vyshgorod district that will create 3 thousand jobs, working facilities by Turkish manufacturer Dalgakiran in Buchanskiy rayon, and an Alfatech company office in Fastivskyi district. (July 20, Ukraine Open for Business
)
- United Kingdom: The Bath & North East Somerset Council and the University of Bath announced a regeneration project in the Bath City Riverside Enterprise Zone. (July 22, Bath & North East Somerset Council Newsroom
)
Africa
Nigeria
- Aliko Dangote, Africa’s richest man, disclosed that his $20 billion refinery in the Lekki Free Trade Zone did not benefit from government incentives. Dangote acknowledged that “the Lagos State gave us a good deal” but noted that he paid $100 million for the land and that the “majority of the population are with us.” He asked the House of Representatives to investigate the quality of diesel and petrol at gas stations, arguing that his refinery did not supply substandard products. (July 21, Daily Post
, Nigerian Bulletin
)
- Lawmakers toured the refinery on Saturday. The refinery has a capacity of 650,000 barrels per day. The Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority has previously warned about over-reliance on the refinery and the refinery’s worse quality of output compared to imported fuel. (July 20, Sahara Reporters
)
- Dangote cancelled plans to invest in a new Nigerian steel plant after accusations by the government that he sought to establish a monopoly with his oil refinery. The Nigeria government says that Dangote requested the suspension of diesel and aviation fuel imports. (July 21, BNN Bloomberg
, Arise News
)
- The Nigeria Customs Services has stepped up its crackdown on smuggling of Premium Motor Spirit (or gasoline/petrol) in Cross River, Akwa Ibom, and the Free Trade Zone Area. The operation aims to stop cartel networks and promote energy security. Customs recently intercepted 26,625 liters of smuggled petrol. (July 19, The Will
)
Kenya
- An MP has petitioned the Kenya Ports Authority over land grab claims in the Dongo Kunda Special Economic Zone. Mombasa Women Representative ZamZam Mohammed claims that land intended for the SEZ has been illegally allocated. In April, the government established a scheme to relocate 1,648 people living in the planned zone’s area. (July 19, Business Daily Africa
)
- Construct Africa included Dongo Kundu SEZ in its recent coverage of five key infrastructure projects in Kenya. They report that the 3,000-acre SEZ project has received US$524 million from the Japanese Government. Toa Corporation, a Japanese company, won a US$222 million construction contract for the zone in February 2024. (July 16, Construct Africa
)
South Africa
- Lebogang Maile, Guateng’s Member of the Executive Council for Finance and Economic Development, has lauded the performance of the Tshwane Automotive Special Economic Zone during a recent visit. The zone has created 3,244 permanent jobs since its launch in 2019, 65% of which were filled by people from communities surrounding the zone. 32% of these went to women and 65.4% to youth. Investments by the Ford Motor Company Southern Africa have been critical to the zone’s success. (July 18, IOL
, Pretoria Rekord
)
- Atlantis SEZ will break ground on its first new factory and commence renovations of a pre-existing factory this month. Atlantis is Africa’s first Greentech SEZ and will focus on manufacturing for the renewable energy sector, green technology, and agribusiness. Atlantis aims to have a minimum of 40% of the zone’s rooftops covered with solar panels and an on-site wind turbine plant. (July 19, Engineering News
)
Middle East
Oman
- The Special Economic Zone at Duqm (SEZAD) has increased its offerings for summer tourism. Three new hotels opened this year and infrastructure projects in the zone are underway. The Public Authority for Special Economic Zones and Free Zones (Opaz) is planning to construct a coastal road serving both the tourism area and a fishing port. (July 21, Times of Oman
)
Saudi Arabia
- The Ras Al-Khair Special Economic Zone is attracting investment through international maritime industry partnerships. Within the zone, the King Salman International Complex for Maritime Industries and Services is intended to be the largest and most technologically advanced shipyard in the MENA region. The SEZ is backed by the Saudi government and offers a range of tax concessions. (July 16, Businesswire
)
Iran
- The Special Economic Zone of Imam Khomeini Port accounts for 34% of the country’s total transit. The port’s importance to Iranian trade makes it a priority for the Iranian government. Approximately $180 million worth of investment deals to develop the zone were signed in December 2023. (July 22, Tehran Times
)
Asia and Pacific
Malaysia
- Johor government has proposed to establish the Johor Talent Development Council (JTDC) to address the shortage of skilled labor in anticipation of the establishment of the Johor-Singapore Special Economic Zone (JS-SEZ). The JTDC will potentially be combined with Invest Malaysia Facilitation Centre as a one-stop center. It could also collaborate with higher education institutions and conduct a study on current labor force training programs. According to Chief Minister of Johor Onn Hafiz, there has been over 74 thousand job openings since January 1st this year, but only 51 thousand job applicants were recorded. (July 18, Bernama
)
Cambodia
- In the first half of 2024, the Council of the Development of Cambodia has approved 190 investment projects focused on special economic zones. These projects represent $3.2 billion in investment and are projected to create 168,572 jobs. (July 19, EAC News
)
Indonesia
- Indonesia's state-owned company Indonesia Tourism Development Corporation (ITDC) emphasized its commitment to encouraging local community participation in developing the Mandalika special economic zone. The effort will focus on training and certification programs for local workers, including training for foreign language, mechanics, and agricultural techniques. Iin September, Mandalika SEZ will host the 2024 Pertamina Grand Prix of Indonesia. (July 22, Xinhua
)
India
- An NGO urges the Tamil Nadu government to conduct a cumulative impact assessment for proposed industrial parks in Gummudipoondi, which will be developed by the State Industries Promotion Corporation of Tamil Nadu (SIPCOT). According to the NGO Poovulagin Nanbargal, SIPCOT received environmental clearance for an industrial park without a public hearing, but it has two more industrial parks planned in the region that, combined, will necessitate a Cumulative Impact Assessment?and a public hearing based on relevant regulations. The NGO also highlights a lack of transparency in the project, citing inconsistencies in published project plans. (July 15, The Hindu
)
Americas
Jamaica
- The Jamaica Special Economic Zone Authority (JSEZA) is looking to expand Jamaica's presence in global markets by targeting Colombia, Mexico and El Salvador. CEO Kelli-Dawn Hamilton will join a business mission to these countries from July 17-26 to foster international partnerships and attract investment to fuel Jamaica's economic growth. The mission seeks to promote Jamaica's large-scale SEZ projects, including the Caymanas SEZ, the Sports SEZ, the Media City, the Technology Hub and the Pharmaceutical Manufacturing SEZ.? The mission underscores Jamaica's potential to become a logistics hub, particularly in the midst of global supply chain challenges, and emphasizes the importance of identifying new markets for SEZ companies. (July 15, Loop
)
El Salvador
- Aristos Real Estate Group plans to build an airport free zone at El Salvador's San óscar Arnulfo Romero International Airport starting in 2025, according to CEO Edwin Escobar. The project, called Aircity, aims to promote aviation logistics and e-commerce, establishing El Salvador as an aviation hub in Latin America. The first phase will include hangars and warehouses covering 500,000 square meters with the potential for 180,000 square meters of buildings. Aircity, which is expected to generate significant international trade revenues, has not yet begun commercialization but has engaged major aviation companies. Aristos Inmobiliaria also owns other free zones and industrial parks in the country. (July 19, E&N
)
