Investor's Guide To Eswatini

12 THE LEGAL FRAMEWORK FOR INVESTMENT Investment The Swaziland Investment Promotion Act of 1998 Investments are generally provided for in the Swaziland Investment Promotion Act of 1998. The act protects investments, supports non-discrimination in the promotion of investment in Eswatini and addresses other matters incidental to investments. In the protection of investments and settlement of disputes, the act provides for the freedom of both local and foreign investors to invest in any sector, save for a limited number of prohibited industries. The government has reserved small sectors exclusively for small and medium enterprises to protect them against unfair competition. Guarantees Against Expropriation Protection against deprivation of property is espoused in the Constitution of Eswatini under Article 19. Furthermore, Eswatini is a signatory to the World Bank Multilateral Investment Guarantee Agreement (MIGA), which seeks to protect investments of foreign investors of member countries from expropriation. The government recognises the risks taken by investors when investing in other countries. Therefore, the Eswatini Government accordingly guarantees that it will not expropriate private property or take measures that will have a similar effect, except for a public purpose and on a non-discriminatory basis and with the prompt payment of adequate compensation. Dispute Settlement and Alternative Dispute Resolution The SIPA Act provides for dispute resolution mechanisms. Official government intervention/arbitration is available upon request, but most investment disputes are handled within the judiciary system, usually through the Industrial Relations Court. Subject to any agreement previously made in writing between investor and government, in the event of a dispute arising between the investor and the government, the investor may elect to submit the dispute either: a) To the jurisdiction of the high court of Swaziland. b) To a process of arbitration under the Arbitration Act, 1904. c) To arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law. d) In the case of a foreign investor, to arbitration under the International Convention for the Settlement of Investment Disputes (ICSID) between states and nationals of other states. The Constitution prohibits expropriation without compensation but rather emphasises conditions under which expropriation can be undertaken with the guarantee of payment for fair market value. To ensure the protection against politically related risks, the country is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank and national laws currently allow for international arbitration upon exhaustion of local remedies. Furthermore, the government understands that doing business outside investors' territory has risks and therefore assures investors of the following, unless where public/social interest and/or differing circumstances warrant: • • • • . Non-discriminatory investments. treatment of foreign 100% foreign ownership of foreign investments. Guaranteed repatriation of funds after payment of local financial obligations. Guarantees against expropriation. Allowance to bring in senior staff and expatriate technical experts whose skills are specialised and not available locally. The Government of Eswatini has committed itself to facilitate the establishment of productive enterprises and reduce the burden of operating expenses and private corporation tax. Consequently, a number of incentives have been put in place of which qualifying investments may take advantage. Investment Incentives and Guarantees Tax Incentives Developmental Approval Order (DAO): This tax incentive is available to investors qualifying as a “development enterprise" as defined by the relevant guidelines. The Government of Eswatini has identified specific areas in which it is seeking to bolster investment (either local or foreign direct investment), and for such areas as manufacturing, mining, agribusiness, tourism and international financial services, there exists a special corporate tax incentive for which the Minister of Finance has the prerogative to nominate a certain investing company as crucial for the development of Eswatini. With cabinet approval, these nominated investing companies receive incentives, including a 10% corporate tax rate for 10 years and an exemption from withholding taxes on dividends for the same amount of time. Investor's Guide To Eswatini 43 33

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