i) Raw materials and products constituting, wholly or in part, inputs of the products worked or processed;
ii) Raw materials and products, which, while not constituting implements or inputs for the products worked or processed, are destroyed or lose their specific properties in the direct manufacturing process;
iii) Raw materials and products intended for the packaging and non-reusable wrapping of goods worked or processed;
c) The benefit of reduced or non-existent export duties on:
i) Raw materials for use in Community enterprises;
ii) Finished or semi-finished products for use in the CEPGL member countries.
Article 29.
The following tax advantages may be granted to authorized enterprises under basic regime I:
a) Exemption from the direct tax on agricultural, industrial and trading profits during the first five financial years, the first financial year being deemed to be the one during which the first sale or delivery is made either on the Community or the export market;
b) Exemption during the first five years from real estate, mining and forestry fees;
c) Temporary exemption for a period of five years from the real estate tax on developed and undeveloped property;
d) Exemption for five years from trading dues.
Chapter II. Authorization Under Basic Regime II
Article 30.
Authorization under basic regime II shall be granted to a Community enterprise or joint enterprise which meets the conditions for admission to basic regime I, as stipulated in article 23, and in addition one of the following special conditions:
a) A tying-up of capital which justifies an extended amortization period;
b) A project which has priority for the economic and social development of the Community;
c) A project set up outside the limits of urban areas for the purpose of rural development;
d) A mining enterprise.
Section I. Tax Advantages
In addition to the economic and financial advantages defined under basic regime I, basic regime II shall afford the benefit of the tax advantages set forth in articles 32 to 37.
Article 31.
Basic regime II shall grant a stabilized tax regime for direct taxes to the beneficiary enterprise.
Article 32.
The duration of the stabilized tax regime for direct taxes may not exceed 15 years, extended where necessary to include the normal installation time.
Article 33.
During the period for which it applies, the stabilized tax regime shall protect the beneficiary enterprise against any increase in direct taxation which is applicable to it on the date of authorization with regard both to tax assessment and rates and to collection procedures.
In addition, the tax or customs provisions applicable under basic regime I may be extended in whole or in part to basic regime II.
Article 34.
The stabilized tax regime may be extended to customs duties and charges. In this case, the stabilization may apply only to customs and excise dues and the turnover tax on imports. The imported equipment and materials covered under the stabilization of customs and excise dues and the turnover tax on imports shall be exhaustively listed in an annex to the enacting agreement.
Article 35.
If there is a change in the tax regime under ordinary law, an enterprise which benefits from a stabilized tax regime may request a revision of its enacting agreement.
Article 36.
Any legal or regulatory provision which runs counter to these regulations shall not be applicable during the same period to enterprises which benefit from the stabilized tax regime.
Section II. Enacting Agreement
Article 37.
The authorization of a Community enterprise or a joint enterprise by the competent CEPGL authority under basic regime II shall include, in addition to the advantages defined in articles 31, 32, 33 and 34 of this Code, the benefit of an enacting agreement.
Article 38.
The enacting agreement shall establish its duration and the procedures for its extension andmust include the same information as specified in articles 18, 19, 20 and 21 of this Code. With regard to taxation, the enacting agreement shall include a list of the stabilized taxes and fees as well as the rates applicable for the duration of basic regime II.
The enacting agreement shall define the various commitments of the enterprise, including general operating conditions, minimum production plant programmes, vocational training and all other obligations accepted by the enterprise with regard to the host country and the other countries of the Community.
Article 39.
Revision of an enacting agreement that has been concluded may be negotiated on the initiative of one of the parties
In the absence of agreement by the partners on the exact terms of the revision, the original regime shall continue to apply for the duration initially decided upon.
Article 40.
The enacting agreement may not contain any commitment, on the part of the states members of the community, which may have the effect of holding an enterprise harmless in respect of losses, costs, or shortfalls arising from changes in technology, the economic situation or factors specific to the enterprise.
Article 41.
An enterprise shall forfeit the advantages provided for under articles 24, 25, 26, 27 and 28 of this Code if it defaults through:
- Failure to meet a deadline for project execution, or technical specifications for product quality;
- A product price which is very high in relation to the price of the same product imported from outside the Community;
- Failure to supply the Community market on a regular basis;
- Mismanagement having a potential impact on supplies to the Community market.
Article 42.
If default is due to the economic situation, a lack of operating facilities granted to the enterprise by the host country or the failure by States members of the Community to observe Community commitments, the dispute shall be settled in accordance with articles 50, 51, 52, 53 and 54 of this Code.
Part III. SPECIFIC PROVISIONS APPLICABLE TO COMMUNITY ENTERPRISES AND JOINT ENTERPRISES OF CEPGL
Chapter I. Specific Provisions for Community Enterprises
Article 43.
The host State must provide guarantees concerning the arrangements for the supply of water, electricity and other resources necessary for operations as well as those for the inward and outward transport of goods.
Article 44.
The competent authorities of the host country shall ensure that the economic unit informs the other member States about the running of an enterprise through the CEPGL Permanent Executive Secretariat. In the case of an enterprise which is still under consideration, however, this responsibility shall rest entirely with the host country.
Article 45.
Any request to be addressed to an agency or country on behalf of a Community enterprise shall be jointly signed by the partner countries.
Article 46.
The location of the head office of a Community enterprise shall be specified in the authorization document or the enacting agreement.
Chapter II. Specific Provisions for Joint Undertakings
Article 47.
Joint enterprises shall be established by the CEPGL Conference of Heads of State.
Article 48.
In the design, preparation and execution of their programmes, joint enterprises shall obtain technical and financial assistance primarily from the specialized agencies and institutions of the Community.
Article 49.
For contracts to carry out the research and work of a joint enterprise, priority shall be given, in cases involving equal competence, to the research institutes, consultants and consulting engineers and executing agencies of the CEPGL member States.
Part IV. Settlement of Disputes
Chapter I. Revocation Procedure
Article 50.
Any CEPGL member country may bring to the attention of the CEPGL Permanent Executive Secretariat a case involving serious dereliction, duly recorded, by an enterprise which benefits from the advantages provided for under one of the basic regimes.
The CEPGL Permanent Executive Secretariat shall carry out an investigation and give formal notice to the enterprise to make good the dereliction in question by registered letter or letter with acknowledgement of receipt.
Article 51.
If the formal notice has no effect within a period of 90 days, the permanent executive secretariat shall transmit the case to the CEPGL Council of Ministers and State Commissioner for consideration.
A copy of the letter shall be sent to the member States and to the enterprise in question. The enterprise must submit its plea in defence within a maximum period of one month from the date of receipt of the letter as attested by the postmark or from the date of the acknowledgement of receipt.
Article 52.
The decision to revoke authorization shall be taken by Conference of Heads of State on the advice of the Council of Ministers and the State Commissioner and following consideration of the information submitted by the parties concerned.
Article 53.
Within a maximum period of 30 days from the date of notification of the revocation decision, the enterprise may appeal the decision in accordance with the arbitration procedure provided for under article 54.
Failing an appeal or if the appeal is submitted late, the revocation decision handed down by the Conference of Heads of State shall remain definitive.
Chapter II. Arbitration
Article 54.
The settlement of disputes arising from the provisions of an enacting agreement and from the application of the authorization document of an authorized enterprise, as well as the determination of any compensation due because of failure to honour commitments entered into, may be the subject of an arbitration procedure as provided for in each authorization document or enacting agreement.
The said arbitration procedure shall contain the following provisions:
(a) Each party shall appoint an arbitrator;
(b) In case of disagreement between the arbitrators, a third arbitrator shall be appointed by mutual agreement between the parties. If no agreement is possible, the authorization or enacting agreement shall stipulate the procedure for appointing the third arbitrator;
(c) The decision shall be handed down by a majority of the arbitrators, who shall determine their own procedures, and shall be definitive in nature;
(d) In the case of Community enterprises the majority of whose capital is initially foreign-held, however, the authorization document may provide for international arbitration procedures replacing those referred to above.
Part IV. Final Provisions Article 55
Without prejudice to acquired rights, the Code may be modified or amended by the Conference of Heads of State of CEPGL.
Article 56.
This Code shall enter into force on the date of deposit of the last instrument of ratification of the agreement on its establishment with the Permanent Executive Secretariat of the Economic Community of the Great Lakes Countries.
Conclusion
Done at Gisenyi, on 31 January 1982.
President of the Republic of Burundi
President of the Republic of Rwanda
President of the Republic of Zaire