Foreign Investment

Foreign investor
Any foreign juridical or physical person Legal Frame work
• The Companies Law of Somaliland (Law No. 25/2004)
• Promotion, Protection and Guarantees of Foreign Investment Law (Law No. 29/2004(& 2008)

Foreign investment registration procedure

Pick an application form for Approval and registration from the Foreign Investment Promotion Office at the Ministry of Trade

• Complete the form
• Mail it or hand it to the Foreign Investment Board, within the Ministry of Trade
• The Board is the supreme decision maker. It consists of:
DGs of the Ministries of Planning, Foreign Affairs, Finance, Commerce, Industry, Health & Labour, Central bank, Chamber of Commerce.

• The chairman of the Board is the Director General (DG) of the Ministry of Commerce
• The Board takes decisions by simple majority vote Registration time (time it takes to register)
• Within 60 days of receipt of application, the Board shall notify the applicant
• If application is approved the Board shall issue ‘Certificate of Foreign Investment in an Approved Enterprise’ as soon as the investor has affected the transfer of assets
• The certificate shall be valid for 18 months within which the foreign investor must invest
• If investor wants to make additional investment, investor must apply and get approval again The

Republic of Somaliland 11 Priority investment areas
• Investment that puts productive use country’s human and natural resources
• Investment that introduces innovative technology
• Investments that generate foreign exchange or substitute imports
• Agriculture
• Livestock
• Fishing
• Minerals,
• Oil & gas
• Industries that use local inputs
• Utilities (Water, energy)
• Tourism Foreign investment forms
• Convertible currency
• Machinery, equipment , material
• Patent rights, trade marks

Technical studies and documentation Guarantee for Foreign investment
• Foreign investment enterprises shall receive the same favourable treatment as domestic enterprise
• Foreign investment shall not be expropriated except where public interest cannot be satisfied other than expropriation, in which case, compensation shall be made Tax incentives
• Foreign investment shall not pay tax on profits for the first three years, after which it shall be entitled to 50% reduction on tax on profit
• Machinery, equipment and material shall be exempt from import tax The Republic of Somaliland Facilities for Foreign personnel
• The Board shall ensure that immigration authorities facilitate the granting of entry permits and residence visas to foreign personnel
• Foreign personnel may freely transfer up to 50% of their salaries, wages, gratuities, and allowances paid in Somaliland. Reinvestment of profits
• Profits may be reinvested in the registered enterprise in which case, the Board shall be notified. The Board shall register amount reinvested in the ‘Certificate of foreign investment registered’. •

The investor shall submit a new application if they want to invest in an enterprise other than the one registered Repatriation of capital and profits
• Profits from registered enterprises may be freely repatriated. In case only part of the profit is repatriated, the remaining can be repatriated in any year following.
• Original investment plus profit reinvested shall be freely transferable after three years from the date of registration
• The transfer of capital shall be affected in original currency in physical equipment and material

• Income tax 6%
• Corporation tax 10%
• Sales tax 5%

Labour Cost
• Manual labour wage=$100-150/month
• Skilled labour salary= $300-500/month
• Professional labor salary=$500 – 1,000/month Labour Cost flexibility
• No minimum wage required

The Republic of Somaliland 13 Settlement of disputes Disputes shall be settled in a manner agreed with the investor. In the absence of an agreement, disputes will be settled within the framework of agreements between Somaliland and the investor’s home country.

International Companies Represented
• Baoding Jeronimo Group of Industries
• Coca Cola
• Western Union
• Caterpillar
• Ophir Energy
• Prime Resources
• Asante Oil
• Nubian Gold Corporation