Investment incentives can affect a project’s costs and cash flow, but an investor needs to establish which benefit applies, when it begins and what conditions must be maintained. A company registration or a general promotional brochure is not enough to answer those questions.
This guide draws on Investment Law No. 99/2025, as published in the Official Gazette dated 1 February 2026, and the Finance Ministry’s earlier investment tax-exemption regulation, No. 03/2024. The presidential decree accompanying the amended law is dated 13 January 2026. The law’s 2025 citation should therefore be distinguished from its signing and publication dates.
1. Check eligibility before calculating the savings
Articles 23 and 24 link the specified profit-tax and import-duty benefits to issuance of an investment certificate. Start by checking whether the proposed investor and activity fall within the law and satisfy the certificate requirements.
Article 17 specifies minimum capital for an investment project under the Act: USD 300,000 for a domestic investor and USD 1 million for a foreign investor, or the corresponding Somaliland-shilling equivalent. It also addresses reinvestment of profits or dividends from an existing enterprise. These investment thresholds should not be confused with the requirements for simply incorporating a company.
Check sector rules separately. Article 25 directs industrial profit and equipment-import incentives to the Industrial Development Law. Article 32 excludes specified foreign investment in mineral research and mining, including petroleum and nuclear-power activities, from this investment-law regime. A sector label alone does not establish entitlement to the benefits described here.
2. Understand the benefits stated in the amended Act
Article 23 provides a 100% profit-income-tax exemption for the first three years from commencement of business operations, followed by a 50% exemption for the next five years, for an investor issued an investment certificate.
Article 24 distinguishes two import-duty benefits:
- A 100% customs-duty exemption for machinery and equipment directly connected with establishing and developing the approved investment project.
- A 100% customs-duty exemption for raw materials, supplies and production components for the first three years from commencement of operations.
These provisions concern particular taxes and qualifying imports. They should not be described as an exemption from every tax, charge or business obligation. Keep evidence of when operations commenced and how each imported item relates to the approved project.
3. Prepare the investment-certificate application
Articles 7-9 address applications and supporting information. Requirements vary with domestic or foreign status and whether the applicant is an individual or company. Relevant documents include identity or incorporation records, constitutional documents, evidence of capital, and joint-venture documentation where applicable.
Article 9 requires project details covering purpose, funding, timing and personnel, and an environmental-impact report where the project may affect the environment. Use the current prescribed form and check the full requirements for the proposed structure.
Article 10 provides for examination of a compliant application within 30 days, followed by issuance or written notification of rejection and reasons. A request to modify an application is also addressed. This statutory procedure does not guarantee approval of every submission.
4. Confirm the tax and customs implementation steps
Certificate issuance and the administrative handling of a tax claim should be planned together. Article 11 of the earlier regulation assigns administration of its incentives to the Finance Ministry and identifies the Investment Ministry as the principal contact for applications and certificate facilitation.
Confirm the current responsibilities, forms and supporting documents with both ministries. For a proposed import, prepare a practical file containing the certificate, project description, itemised invoices, quantities, intended use and shipping documents where applicable. This is a preparation checklist, not an exhaustive statutory document list.
Before dispatching goods or assuming relief in a financial model, clarify the tax covered, qualifying items, applicable period and evidence required for clearance. Identify who will handle questions or discrepancies between the certificate and the import documentation.
5. Maintain the certificate and project conditions
Article 10 states that the certificate is valid for twelve months; Article 11 addresses annual renewal and failure to commence implementation within two years. Articles 12 and 13 address transfer and amendment, including Ministry approval requirements.
Maintain a compliance calendar covering certificate renewal, project milestones, tax filings and other licences. Check whether changes to ownership, scope or activity require approval. Preserve capital evidence, accounts, import records and documents demonstrating use of exempt goods for the approved purpose.
The earlier regulation’s Articles 9 and 12 also address compliance and inspection. Confirm the currently applicable requirements rather than assuming an exemption removes accounting, employment, environmental or non-exempt tax obligations.
6. Understand the consequences of non-compliance
Article 14 identifies grounds for suspension, including false application information, misuse of incentives, unauthorised transfers, renewal failures and breaches of certificate conditions. It provides for at least thirty days’ written notice of proposed suspension and an opportunity to make representations.
Article 15 states consequences of revocation, including loss of certificate-derived entitlements and repayment of taxes exempted on the basis of the investment permission. It also addresses return of benefits and restrictions on obtaining a new certificate. Seek advice promptly when a notice is received.
Article 16 provides an appeal to the Supreme Court against refusal, suspension or revocation of an investment certificate. The older regulation contains a separate ministerial appeal provision for decisions under that regulation. The correct route depends on the decision being challenged; do not assume the two procedures are interchangeable.
Discuss your proposed investment
Prepare the project plan, ownership details, proposed capital, certificate or application, intended imports and existing incentive correspondence. Identify any decisions that depend on tax savings and any commitments already made.
Contact Harir Legal & Advisory Group to discuss eligibility, applications and the compliance questions relevant to your project.
Disclaimer: This article provides general information, not tax or legal advice on a particular investment. Confirm applicable legislation, current implementing measures, sector rules and certificate conditions before relying on an incentive or committing funds.