INVESTMENT CONSIDERATIONS

GOVERNMENT POLICY

Business in New Caledonia is governed by French commercial laws. Corporate structures are the same as those existing in metropolitan France. Authorities have had active development policies - with a full set of incentives - to generate new employment opportunities. In order to take into account the limited size of the employment market, provision will be made to give priority access to local employment to persons residing on a long-term basis in New Caledonia. Procedures for setting up a company and registering it in the Trade Register are quite simple, through the "one stop shop" of the Chamber of Commerce and Industry.

RESTRICTIONS ON FOREIGN INVESTMENT

Foreign investments are subject to prior authorisation. There is no restriction on the amount or percentage of foreign investment in a New Caledonia company's capital, or on repatriation of dividends. They are only subject to declaration. Except for the fishing, health and defense industries where restrictions and authorization procedures apply.

Public-authorities-held land may be leased on a 35-year term (renewable). Private land can be owned freely. Customary land may be leased with the relevant tribes.

All non-French citizens must hold a work permit if they wish to carry on a business or be gainfully employed in New Caledonia

TRANSFER OF CAPITAL AND PROFITS

Transfers of capital and profits repatriation are free, under the prevailing liberal framework (French commercial law).

TAXATION

New Caledonia has its own taxation system. The corporate tax rate is 30 %.

Tax-based incentives specific to New Caledonia include the right to deduct investments from taxable income, and tax exemptions of up to 20 years on investments in the hotel sector. Companies setting up in the townships of Poya, Pouembout and Koné are entitled to a 8-year tax exemption.

Personal income tax is usually advantageous for non-French citizens residing in New Caledonia. There are no formal tax agreements with most countries of the region, but a number of measures enable double taxation to be avoided.

The tax system is mainly based on the General Import Tax whose application and yield are considered well suited to New Caledonia's size and characteristics. Provision has been made for tax exemptions in certain priority sectors, as well as on raw material, packing materials and goods to be re-exported. Customs duties are levied on goods from non-E.U. countries.

INVESTMENT PROTECTION

French and European-standard legal framework ensures adequate protection.

INVESTMENT INCENTIVES

Particularly attractive investment incentives allow for substantial initial risk reduction (up to 67.5% in some cases).

FINANCIAL ASSISTANCE

The Provinces have set up a whole range of incentives such as outright grants for feasibility studies, export market research, productive investments, job creation, etc. Each of the New Caledonia's three Provinces has also set up a joint venture company to encourage and support development in approved priority sectors and in some areas, hold full equity control and ownership:

• PROMOSUD (Southern Province) is backing major investments in tourist hotels, as well as in aquaculture and processing industries ;
• SODIL (Loyalty Islands Province) is involved in commercial fishing, air and sea transport services, and the hotel trade ;
• SOFINOR (Northern Province) is a major operator in nickel mines, as well as in hotels and in prawn farming.
• ICAP ("Institut Calédonien de Participation") is a governmental financial institution designed to promote development outside the urban area known as "Greater Nouméa". Its action, in the form of minority equity participations and cash advances, is usually limited in duration.

Other assistance is also available from the French State and the European Union for infrastructure investments. Lastly, New Caledonia also has the advantage of investment-promoting measures common to all French Overseas Territories, such as the "Pons Act", a scheme that enables new equipment or facilities to be financed at reduced cost by French investors, who are granted tax exemptions in return for their investments in any French Overseas Territory. The equipment or facility is first leased for a period of 5 years, after which the beneficiary attains full ownership.

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