Parliament has approved an amendment to the Special Economic Zone (SEZ) Act, raising the minimum investment requirement for projects to USD 500 million and introducing new tax concessions aimed at attracting large-scale foreign investment.
The amendment, proposed by Baarah MP and People’s National Congress (PNC) Parliamentary Group Deputy Leader Ibrahim Shujau on behalf of the government, was passed with 46 votes in favour and 10 against during Wednesday’s sitting.
The revision marks one of the most significant changes to the SEZ framework since the law was first introduced, establishing stricter investment criteria and outlining the conditions under which new “sustainable townships” can be developed.
According to the new law, a sustainable township is defined as a large-scale real estate or integrated tourism development managed within a designated zone, incorporating residential, commercial, and public service facilities. The projects must prioritise long-term environmental sustainability by sourcing at least 60 percent of their operational energy from renewable sources and ensuring self-sufficient waste management systems.
Developers will also be required to include international-standard facilities such as hospitality training centres or healthcare institutions, alongside provisions for on-site housing, schools, and recreational amenities. The projects are expected to include agricultural or co-agricultural initiatives to reduce import dependency and strengthen local food production.
To attract investors, the amendment introduces several fiscal incentives. These include a reduced income tax rate of five percent for the first ten years, increasing to ten percent for the next decade, after which the standard rate under the Income Tax Act will apply. Developers will also be exempt from import duties on capital goods used in the construction and development of SEZ projects.
Additionally, a new property transfer tax will apply to villa and room transactions within SEZ tourist and integrated resorts, structured on a tiered basis: one percent on the first transaction, two percent on the second, and four percent on subsequent sales.
The government has stated that these measures aim to attract major foreign investment while ensuring that SEZ projects contribute to long-term economic growth and environmental sustainability.
