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EGYPT |
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How to invest in Egypt? |
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While Egypt has no specific legislation governing foreign direct investment, most foreign investment takes place under the terms of Investment Guarantees and Incentives Law n°8-1997, which defines incentives for investment in certain activities and by laws 162-2000, 13-2002 and 13-2004, and law 83-2002 on the special economic zones. |
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How to invest in Egypt? |
The incentives include tax breaks, reduced tariffs on imported inputs, and guarantees against confiscation. Foreign investment is managed by the General Authority for Foreign Investment and Free Zones (GAFI), whose role has gradually shifted from investment regulation to investment promotion and facilitation. The government is currently working on a detailed program for fast tracking and streamlining bureaucratic procedures for investments, with the aim of upgrading the business environment and introducing further deregulation
Foreign companies can invest either in the framework of corporate law or legislation governing investment guarantees and incentives, depending on the advantages they wish to obtain and the field of activity.
Corporate law introduces a number of investment incentives, including tax exemptions of up to 50 percent on income earned from shares registered on the stock exchange. The Investment Guarantees and Incentives Law passed in May 1997 covers investment through joint ventures, limited liability companies and partnerships and governs "inland investments", essentially domestic investment projects and investment in free zones, which are treated as being outside the domestic economy for purposes of taxation, customs and trade.
Unlike corporate law, which applies to all categories of investment, the Investment Guarantees and Incentives Law applies to investment (domestic or foreign) in certain specified activities or sectors, such as air transportation and related services, animal, poultry and fish farming, financial leasing, hospital and medical centres, hotels, tourist villages, tourist travel and transportation, certain housing projects, industry and mining, infrastructure relating to drinking water, sewage, electricity, roads, and communications services, oil services in support of exploration and the transport and delivery of natural gas, overseas maritime transport, production of computer software and systems, venture capital…
Investment incentives under the Investment Guarantees and Incentives Law include tax exemptions on company profits, personal income tax on dividends, and annual stamp duty on capital. Tax exemptions are granted for five years for all investments, up to ten years for companies established in new industrial zones, new urban communities, or remote areas, and up to 20 years from the date of establishment for investments outside the Old Valley. In addition, all customs duty on import of capital by companies registered under this law are reduced to 5 percent. In addition to tax breaks, investors receive guarantees against confiscation, immunity from administrative sequestration, and the right to import and export inputs and final products without having to use agents and export licenses.
The Government of Egypt has been promoting free trade zones since 1974. Incentives for doing business in free zones are meant primarily to attract investment, to provide employment for Egyptians, and to encourage exports. Law 83/2002 provides for the establishment of special economic zones. In particular, the law provides for a special customs system with simple and efficient procedures, tariff-free import of inputs and equipment, a special taxation system with lower rates, and a special regime for labour relations. There are no restrictions on the type of investment activities that are eligible. There are 7 public free zones and 39 private zones.
Foreign exchange controls were abolished in 1991 and there are no restrictions on repatriation of funds by companies or rules requiring foreign companies to hold foreign currency accounts.
In addition, Egypt has adopted a law on intellectual property rights and new legislation on money laundering. A new law governing competition is also in force. |
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