March 23, 2020

Investment Incentives for Expansions of Existing Project

On 18 February 2020, the Egyptian Prime Minister issued Decree no. 6/2020 (the “Decree”) to ‎grant expansions of existing projects in Egypt the same incentives as the newly established ‎projects under the Egyptian Investment Law no. 71/2017 (the “Investment Law”).‎

In order to enjoy the same incentives, the expansion of an existing project will have to fulfill ‎the following conditions:‎

  1. The expansion should be in one of these sectors specified under the Investment Law ‎and its Executive Regulations: manufacturing, agriculture, trade, education, health, ‎transportation, tourism, housing, construction, sports, electricity, energy, natural ‎resources, water, telecommunication and technology.‎
  2. The Expansion shall take place after the enforcement of this Decree, i.e., after 8 March ‎‎2020.‎
  3. The expansion shall include adding new assets to the existing project which results in ‎increasing its production capacity.‎
  4. ‎ The expansion shall have its separate accounts and financial statements.‎

It is noted that the incentives given to investment projects under the Investment Law are ‎divided into three types, (1) general, (2) special, and (3) additional.‎

The general incentives: includes mainly, among others, applying a unified flat customs ‎duty rate of 2% on all machines and equipment needed for the project. ‎

The special incentives: offers a tax reduction system at a rate of 50% of the investment ‎cost of the project in geographical locations that are in most need for development ‎‎(underdeveloped locations); the law named these locations as Zone A. The tax deduction will ‎be at a rate of 30% in other remaining geographical locations other than Zone A for projects ‎on the condition that they work on a one of the targeted sectors specified by the law; the law ‎named these locations as Zone B. In all cases, the tax reduction amount shall not exceed 80% ‎of the paid-up capital of the project up until the date of operation.‎

Additional incentives: includes (i) allowing the project to have its own customs gates for ‎its imports and exports, (ii) allocating free land for specific strategic projects, (iii) having the ‎government to share part of the cost of attaching utilities to the land allocated to the project as ‎well as part of the cost of the technical training of the employees, and (iv) refunding half the ‎price of the land allocated to the industrial project in case it succeeded in starting production ‎within two years from having the land allocated.‎

For more information about the incentives and guarantees for investment project under the ‎Investment Law Cick here

If you have any question regarding the above, please contact Dr. Fatma Salah and Mohamed ‎Amir.‎


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