The Saeima has adopted and the President of State promulgates the following Law:
Chapter I
GENERAL REGULATIONS
Article 1. Terms used in the Law
The following terms are used in the Law:
1) Regime of free customs zone - according to this Law: an aggregate of alleviation's and special customs measures what shall be applied to entrepreneurial associations (enterprises) which territories have acquired the status of free customs zones in the free port, as well as to management of the free port;
2) licensed entrepreneurial associations - according to this Law: entrepreneurial association (enterprise) what have signed the contract with the management of the free port on entrepreneurial activity in the regime of the free customs zone and received the permit from the management of the free port for such activities;
3) territory of licensed entrepreneurial association - according to this Law: territory where the land is used by the licensed entrepreneurial association on the basis of ownership rights, lease contract or other legal basis;
4) clients of the port - according to this Law: consignees, consignors and other who/which utilizes services of the management of the free port and entrepreneurial associations (enterprises) located in the free port but who/which has not the territory in the free port with the status of free customs zone;
5) special measures for customs control - according to this Law:
special measures for customs control according to the Republic of Latvia
Customs Code determined by the Cabinet of Ministers.
Article 2. Objective of the Law
The Law establishes the principles of the Ventspils Free Port (henceforth - Free Port) activity and procedures of the management to promote participation of Latvia in intentional commerce, attaching of investments, developing of production and services, as well as create the new jobs.
Article 3. Territory, structure and basic regulations of the Free Port's activity
(l) The Free Port is a part of the Republic of Latvia territory what shall correspond to borders of the Port of Ventspils determined by the Cabinet of Ministers.
(2) Licensed entrepreneurial associations, as well as entrepreneurial associations (enterprises) what have not received permit for performing the entrepreneurial activity in the regime of the free customs zone may perform the entrepreneurial activity in the territory of the Free Port.
(3) Customs alleviation's and special measures for customs control established by this Law shall be applied to entrepreneurial associations (enterprises) signed the contract with the Free Port Management (Authority) on entrepreneurial activity in the regime of the free customs zone and have received the permit for such activity in the procedure established by this Law as well as to the Free Port Management. Territories of indicated entrepreneurial associations (enterprises) shall be the free customs zones.
(4) It is allowed to import goods and other articles into the free customs zones located in the Free Port from other customs territory of the Republic of Latvia and export (bring out) them from above mentioned zones to other customs territory of the Republic of Latvia only through the customs border crossing points in the procedure established by the Customs Code, laws and the Cabinet of Ministers regulations.
(5) If goods produced anew or processed in the free customs zones located in the Free Port are exported from the free customs zones and the anew added value of these goods corresponds to 40 percent or exceeds 40 percent of the total value of the commodity, then above mentioned goods shall be recognized as goods made in Latvia.
Article 4. Land legal relations in the territory of the Free Port
(I) The land area owned by the State in the territory of the Free Port can not be sold, presented of alienated in other way.
(2) Area of inland waters of the Free Port territory (port waters) is a property of the State.
(3) The land area of the Free Port owned by physical person or legal entity may be, sold, presented, exchanged or alienated in other way only for the benefit of the State or local government.
(4) The personal easement for the benefit of the Free Port Management is established by this Law to the land owned by physical persons or legal entities occupied by the Free Port according to this Article. The Free Port Management is entitled to use the land owned by physical persons and legal entities in its territory for needs of the Port, as well as to lease it to entrepreneurial associations (enterprises) operated in the territory if the Free Port without rights to transfer it to sublease.
(5) The user of the easement can construct the buildings and structures on the land in his/hermits territory, necessary for the Port's activities, as well as to allow their construction to entrepreneurial associations (enterprises) transferred the land for lease determining the disposing of these buildings and structures in the case of termination of the land lease contract.
(6) Upon termination of the easement rights the land owner can not demand the restitution of the land prior to payment of compensation for buildings and structures.
(7) The Free Port Management shall pay taxes and cover expenses connected with the land maintenance but other encumbrances failed upon the land shall be bearded and carried out by the land owners.
(8) The land user shall pay the compensation to its owner for the easement according to agreement but not more than five per cent annually of the cadastral value of the land.
(9) The plot of land subject to easement established by this Article shall be determined at any individual case by the Cabinet of Ministers after establishing the land ownership rights. The Free Port Management is entitled to record with the Land Book the established easement rights in the unilateral procedure.
Chapter II
ORGANIZATION OF THE FREE PORT MANAGEMENT
Article 5. Tile Free Port Management
(l) Managing of the Free Port is performed by the Management (Authority) of the Port of Ventspils (henceforth - the Free Port Management), what competence is eatable shed by this Law, Law on Ports, Regulations of the Ventspils Free Port Management, and Regulations of the Ventspils Free Port, regulating the internal regime of the Free Port.
(2) The Free Port Management is a legal entity. It shall belong the same customs alleviation's as the licensed entrepreneurial associations.
Article 6. The Free Port Board
(1) The superior decision - making institution of the Free Port Management shall be the Board of the Free Port. Its members shall be appointed to the post and dismissed in the procedure established by Article 8 of the Law on Ports.
(2) The executive body of the Board of the Free Port is guided by the Free Port Manager, appointed to the post and dismissed by the Board of the Free Port after compliance with the Minister of Transportation.
Chapter III
CUSTOMS REGIME IN THE FREE PORT
Article 7. The customs offices' activities in the Free Port
The customs offices shall perform their functions in accordance with the Republic of Latvia Customs Code and other laws considering previsions of this Law.
Article 8. Export of goods from the territory of licensed entrepreneurial association
To goods which are exported (brought out) from the territory of the licensed entrepreneurial association (free customs zones) to other customs territory of the Republic of Latvia provisions of the Republic of Latvia laws and other normative acts on importing of goods from the abroad (import), corresponding import customs duty ( (tax) rates, as well as other business restrictions and prohibitions shall be applied.
Article 9. Import of goods in the territory of the licensed entrepreneurial association
To goods which are imported (brought in) in the territory of the licensed entrepreneurial association located in the territory of the Free Port (free customs zone) from other customs territory of the Republic of Latvia provisions of the Republic of Latvia laws and other normative acts on exporting the goods to abroad (export), as well as business restrictions and prohibitions shall be applied.
Article l0. Enumeration (stock taking) of goods in the Free Port
Licensed entrepreneurial associations shall ensure the enumeration of goods brought in and produced in their territory and goods brought out from it in the procedure determined by the Cabinet of Ministers.
Article 11. Subjection of physical persons to customs offices
Physical persons when entering the territory of the licensed entrepreneurial association and leaving it shall be subject to the customs control.
Chapter IV
ENTREPRENEURIAL ACTIVITY IN THE FREE PORT
Article 12. Regulations for entrepreneurial activity in the Free Port
(1) Services of goods (cargo) loading, storing, processing and other services and production of goods in the free customs zone regime shall be performed by entrepreneurial associations (enterprises) what are registered in the Republic of Latvia, have signed the contract on entrepreneurial activity in the free customs regime and received permit for performing such an activity.
(2) The Free Port Management shall arrange the register of licensed entrepreneurial associations.
(3) Other entrepreneurial associations (enterprises) located in the territory of the Free Port but failed to sign the contract on the entrepreneurial activity in the free customs zone regime and to receive permit for such an activity, may perform the entrepreneurial activity without alleviation's determined for licensed entrepreneurial associations and being subject to control of the Free Port Management in the frame of its competence.
Article 13. Precontlitions for applying of thee Free Port regime
(1) The regime of free customs zone shall be applied only to those entrepreneurial associations (enterprises) which territory is boundered by one or several customs crossing points and the guarding arranged appropriately which shall ensure the movement of goods and individuals to the territory of the licensed entrepreneurial association and from it in compliance with the customs requirements. Any licensed entrepreneurial associations shall ensure guarding of its territory.
(2) Entrepreneurial associations (enterprises) to which the free customs zone regime is applied may not perform the entrepreneurial activity outside the territory corroborated to them and boundered appropriately, excluding activities indicated in Part 3 of this Article.
(3) The following activities shall not be considered as the entrepreneurial activity outside the territory of the licensed entrepreneurial association:
1) location of the management institution or representative (according to Article 8 of the Law "On Entrepreneurial Activity") of the entrepreneurial association (enterprise) outside of the bounded territory;
2) performing negotiations ands signing contracts outside of the boundered territory;
3) other activities without features of execution commercial transactions;
4) transit of goods through the boundered territory.
(4) The regime of free customs zone shall be applied to entrepreneurial associations (enterprises) if they bring out for free circulation to other territory of the Republic of Latvia not more than 20 per cent of the produced goods.
Article 14. Procedures by which thee contract on thee entrepreneurial activity in the Free Port shall be signed and permit shall be issued
(1) The entrepreneurial association (enterprise) what has already established or will be established in future (the claimant is a founder) is entitled to claim the signing the contract and receiving of permit considering the following preconditions:
1) the type of the entrepreneurial association's(enterprise's) activity and future development shall correspond to program of the Free Port development approved by the Board of the Free Port;
2) founders and members of the entrepreneurial association (enterprise) shall have a good reputation, stable financial condition and experience in the entrepreneurial activity (above mentioned information shall not be required about the local governments and the State as the founders and members, but may be required about the state and local government enterprises).
(2) The Free Port signs contracts on the entrepreneurial activity concerning specific types of activity (for example, loading, producing of goods, storing). The contract can be signed concerning several types of activity.
(3) The applicantshall submit for signing of contract and permit to the Board of the Free Port the following documents:
1) application;
2) the copy of the registration certificate issued by the Enterprise Register and certified by the notary;
3) the copy of the statutes certified by the notary;
4) annual account for two years approved by the sworn auditor (or according to the consent of the Board of the Free Port the copy of the abridged account);
5) the program of activity, including the investment program;
6) other essential information about the entrepreneurial association (enterprise) and its founders according to decision of the Board of the Free Port.
(4) The decision on signing the contract with the applicant (claimant) shall be passed by the Board of the Free Port within three months after filing of documents indicated in Part 3 of this Article. The application of the claimant is rejected if the preconditions mentioned in Part I of this Article are not met.
(5) If the claimant for signing of contract is a founder of the newly established entrepreneurial association (enterprise) the decision on signing the contract can be passed by the Board of the Free Port on the basis of the draft founding documents and draft programs of activity, submitting the temporary permit simultaneously. The decision on signing the contract shall be in force for six months. If the entrepreneurial association (enterprise) is not established within this period of time, the decision shall be recognized as null and void.
(6) The contract on the entrepreneurial activity in the regime of free customs zone shall be signed for the period of time not less than five years.
(7) The contract on the entrepreneurial activity in the regime of free customs zone shall be a basis for issuance of the permit for entrepreneurial activity in the Free Port. The permit shall be issued for the term of validity of the contract after examining the readiness of the entrepreneurial association (enterprise ) for activity in the Free Port. The Free Port Management shall ensure the enumeration of permits.
Article 15. Procedure by which the contract on the entrepreneurial activity in the Free Port shall be terminated and the permit canceled
(1) The contract on the entrepreneurial activity in the Free Port can be terminated before expiration of the term (early termination) by the decision of the Free Port Management if it is stated, that the licensed entrepreneurial association violates the laws, other normative acts on the signed contract.
(2) Simultaneously with the decision on the termination of the contract before the expiration of the term (early termination) the Board of the Free Port shall pass the decision on annulment of the permit and determine the date for fulfillment of the decision.
(3) The entrepreneurial association (enterprise) which permit for the entrepreneurial activity in the regime of the free customs zone is annulled is entitled to perform the entrepreneurial activity according to general provisions if the entrepreneurial activity is not prohibited to it in the procedure stipulated by law due to nature of the violations.
Article 16. Liability for early termination of the contract and reviewing of disputes
(1) The Free Part Management shall be liable for groundless early termination of contract and annulment of permit in accordance with the Civil Law.
(2) Disputes on the early termination of contract, annulment of permit and compensation of losses shall be reviewed by the court according to jurisdiction or by mutual agreement of parties - by the court of arbitration or foreign court.
Article 17. Duty free stores
In the territory of the licensed entrepreneurial associations the duty free stores may be arranged in the procedure stipulated by the Cabinet of Ministers.
Article 18. Issuing of certificate on the origin of goods
The Free Port Management is entitled to issue the certificate of the general type (nonprefencial) in the procedure stipulated by the Cabinet of ministers what certifies the producing or processing of goods in the licensed entrepreneurial association as well as the certificate what certifies that the goods transported through the territory of the licensed entrepreneurial association located in the Free Port are not processed in this territory.
Article 19. The tax payment regime
(1) Goods and services delivered or rendered to the licensed entrepreneurial association in its territory or to the Free Port Management by the person taxable with the value-added tax shall be imposed with the value-added tax according to 0 per cent rate according to Paragraph 3 of Part I of Article 7 of the Law "On value-added Tax".
(2) Bringing in of goods into the territory of the licensed entrepreneurial association or for the needs of the Free Port Management from abroad (import) or bringing out from it to abroad (export) shall be exempt from the customs tax and excise tax, excluding the established by Part 3 of this Article.
(3) Retail trade, excluding the duty free stores and rendering of services in the territory of the licensed entrepreneurial associations shall be imposed with taxes anticipated by law in the procedure stipulated by the Cabinet of Ministers.
TRANSPORTIONAL PROVISION
By approval of the Ventspils Free Port regulations the Regulations of the Port of Ventspils shall be applied.
The Law takes effect as of January I, 1997.
The Law was adopted by the Saeima on December 19, 1996.
The President of State|
G. Ulmanis
Riga, January 3, J997
The Latvia Law Institute , pursuant to a special agreement with the Ministry of Justice of the Republic of Latvia, is authorized to perform and certify this translation. Should there be any difference between the meaning of the Latvian text and that of the English language, the official Latvian language text shall prevail.
ACT 429 OF 1996 © Copyright 1997 by the Latvia Law Institute