Investment Framework in Egypt

- Investment Law no.72 / 2017 and its executive regulation

This law issued in 2017 aims at improving the investment environment by addressing the shortfalls in previous laws. It stated the role of the General Authority for Investment and Free zones (GAFI) as the One-Stop-shop for investors.

The law provides a number of guarantees for investors as follows:

  • All investments will receive fair and just treatment.
  • Foreign investors will receive the same treatment under law as Egyptian nationals.
  • Investments will not be governed by arbitrary procedures or discriminatory decisions.
  • Investment projects will not be nationalized.
  • No administrative authority can revoke or suspend investment project licenses without proper warning, and providing time to rectify the causes of the breach.
  • Foreign investors are guaranteed residence in Egypt during the term of a project.
  • Investors have the right to transfer their profits abroad, as well as the liquidation proceeds.
  • Investors' projects may employ up to 10% foreign employees, reaching up to 20% if needed.

To help attract global investors, the law has stated incentives for investing companies.

Companies will pay a unified 2% customs tax on the value of imported equipment and machinery. They will also be exempted from stamp tax and registration fees on articles of association, mortgages, loan agreements and land contract notarizations related to their investment for a period of 5 years.

The law provides deductions from taxable net profits according to a forthcoming investment map that will identify investment areas as Sectors A and B.

  1. Investors will receive a 50% discount off investment costs in Sector A which covers the Suez Canal Economic Zone, The Golden Triangle, and the Least Developed Regions as decreed by the Prime Minister’s Office,
  2. Investors will receive a 30% discount off investment costs in Sector B (which covers the rest of the country) for specified priority activities such as labour-intensive industries, small and medium enterprises, companies that export more than 50% of their production, automotive and feeding industries, ICT industries, etc.

Egypt's Council of Ministers may decree additional incentives.

An independent arbitration and mediation center will have the authority to pursue the settlement of investment disputes that arise among investors and state authorities.

  • A ministerial committee will be established to review complaints and disputes between investors and state authorities.
  • Committees within GAFI will examine complaints against resolutions issued in accordance with this law.

 

- Investment Regimes

Egypt offers different investment regimes for domestic and offshore investors alike, designed to fit every business model. The different investment schemes in Egypt are as follows:

  1. Investment Zones
  2. Technological Zones
  3. Free Zones
  4. Special Economic Zones

Egypt has 114 industrial zones, 13 investment zones (three investment zones under construction), nine public free zones and one special economic zone.

 

A. Investment Zones

Investment zones were implemented based on the concept of business clusters, to enhance economic development and to attract FDI. In July 2007, the Egyptian government passed a decree allowing private sector investors to build, promote and manage investment zones, which are applicable for all types of industries and services. Government involvement in these zones is limited to facilitating regulations and procedures applied in the industrial zones.

 

B. Technological Zones

Upon a proposal by the General Authority for Investment and Free Zones’ Board of Directors and request by the minister concerned with the communications and information technology affairs, the Prime Minister may license the establishment of Technological Zones in the field of communications and information technology industry, including the industrial activities, design and development of electronics, data centres, outsourcing activities, software development, technological education, and other associated or complementing activities, as indicated by the Implementing Regulations of this Law. All the tools, supplies, and machinery required to conduct the licensed activity by all kinds of the Projects established within the Technological Zones shall not be subject to the taxes and customs duties, in accordance with the conditions and procedures indicated by the Implementing Regulations. The Projects established within the Technological Zones shall enjoy the special incentives provided for in Article (11) (Special Incentives Section) of Law 72 for 2017 according to the relevant sector.

 

C. Free Zones

Free zones were launched more than 30 years ago to grow export oriented industries and services investment, encourage technological advances and create jobs. Free zones are located within national territory but are considered offshore areas and therefore are exempt from many inland investment costs.

Egypt currently has nine public free zones around the country. They are located in: Nasr City (in the Greater Cairo Area), Alexandria, Damietta, Port Said, Suez, Ismailia, Shebein El-Kom, Media Production City and Keft. Three additional free zones are under development in Badr, East Port Said and Minya. In addition to public free zones, private zones may also be established, each limited to a single project.

 

D. Special Economic Zones

The Suez Canal Economic Zone (SCZone)
Suez Canal Economic Zone was established under Law No.330/2015. The Suez Canal Economic Zone (SCZone) is a world-class zone and trade hub along the banks of the newly-expanded Suez Canal. It was the first economic zone of a special nature to be established in Egypt, according to Law No. 83/2002 and its amendments. It is strategically located on the main trade route between Europe and Asia, more than eight percent of global trade passes through every year. Spanning 461 km², almost two-thirds the size of Singapore, the SCZone consists of two integrated areas, two development areas, and four ports.

The two integrated areas are Ain Sokhna including Ain Sokhna Port and East Port Said with East Port Said Port. The two development areas are Qantara West and East Ismailia. The four ports are West Port Said Port, Adabiya Port, Al Tor Port, and Al Arish Port.

 

- Industrial Licensing Law

Law no. 15 of 2017 was approved on facilitating the procedures of obtaining industrial licenses, The new regulation aims at simplifying the licensing process; cutting paperwork and reducing bureaucracy; hence, making it easier for investors and enterprises to obtain industrial permits, as well as resolving the issue related to operation permits.

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