6 May 2019
EGYPT: Eligibility for Investment Incentives Extended to Ongoing Projects
On 7 March this year, the Egyptian cabinet approved a proposal by the Investment and International Cooperation Minister to amend the country’s 2017 Investment Law. The draft amendments to Egypt Law No. 72/2017 propose that a final clause be added to Article 12 of the current law. This article currently restricts the incentives provided for in Articles 11 and 13 to solely investments in new projects. Investments for expanding or adding to projects at a later stage are excluded. The amendments propose that such investments are also deemed eligible for the incentives.
Article 11 of the current law provides for a 30% discount on net taxable profits for up to seven years for investments in certain designated industries (Sector B), including renewable energy; tourism; automotive, and manufacturing primarily for export. This rises to 50% in certain geographic regions (Sector A) that have been earmarked for development, such as The Suez Canal Economic Zone; The Golden Triangle Economic Zone, and other areas that may in future be targeted for development by ministerial decree.
Article 13 provides various discretionary benefits to investors in relation to the extension of utilities to existing properties; the sharing of costs by the government on technical training; a 50% refund on the value of land allocated for industrial projects when production starts within two years from the land delivery date; and, in the case of projects deemed to be of strategic significance, the allocation of land for use by the project will be provided free of charge.
Furthermore, the amendments add a final paragraph to Article 48 stating that the signatures of partners or their representatives should be on all corporate contracts and limiting the total fees to be paid on paid-in capital to a maximum of EGP10,000 (US$578) or the equivalent in foreign exchange. Dr. Sahar Nasr, Egypt’s Minister of Investment and International Cooperation, said that previously, the high fees incurred were acting as a disincentive.
Now that the amendments have been approved by the cabinet, they need to be ratified by President Abdel Fattah Al-Sisi, whereupon they will take effect immediately.