1.1<\/strong> In 9\u00a0August 2015, after three days from the inauguration of the New Suez Canal1<\/a><\/sup>, President Abdel Fattah El-Sisi issued Decree No. 330\/2015 declaring the areas adjacent to the Suez Canal as a special economic zone (the \u201cSCZone Decree<\/strong>\u201d)2<\/a><\/sup>. This zone shall be governed by Law no. 83 of 2002 on Special Economic Zones3<\/a><\/sup> (“Special Economic Zone Law<\/strong>” or “Law 83\/2002<\/strong>“) and its Executive Regulations issued by virtue of the Prime Ministerial Decree no. 1625 of 2002.<\/p>\n 2.1<\/strong> The Suez Canal Special Economic Zone (“SCZone”) shall cover an area of 460.6 km2 which includes 5 geographical locations and 6 maritime ports4<\/a><\/sup>.<\/p>\n 2.2<\/strong> The 5 geographic locations are as follows5<\/a><\/sup>:<\/p>\n 2.3<\/strong> The 6 maritime ports are as follows6<\/a><\/sup>:<\/p>\n 3.1<\/strong> According to Law 83\/2002, a special economic zone is administered by a governmental authority to be established by the Prime Minister and affiliated with the Cabinet. This regulatory authority shall bear the name of the special economic zone, and shall have its headquarter inside the zone or any of its affiliated areas.<\/p>\n 3.2<\/strong> In 19 August 2015, the Prime Minister issued Decree no. 2282 of 2015 establishing the General Authority for the Economic Zone of the Suez Canal (“SCZ Authority<\/strong>“) as the regulatory authority responsible for administering SCZone. SCZ Authority has replaced the earlier General Authority for North-West Suez Economic Zones which was established in 2003.<\/p>\n 3.3<\/strong> The North-West Suez Special Economic Zone was the first special economic zone to be established in Egypt in implementation of Law 83\/2002. It was established by virtue of Presidential Decree no. 35 of 2003 spanning over an area of 90 km2 (as an initial phase). Such area was subsequently expanded by virtue of Presidential decree no. 41 of 2007 to reach 96,666 km2.<\/p>\n 3.4<\/strong> According to Prime Minister Decree no. 2282 of 2015 establishing SCZ Authority, all lands and establishments owned by the Government inside the boundaries of the SCZone shall be transferred to the SCZ Authority without the need to take any legal action. All rights and obligations related to such lands and establishments shall be assigned to SCZ Authority. The 6 maritime ports defined in the SCZone Decree shall also be assigned to the SCZ Authority.<\/p>\n 3.5<\/strong> The goal of the SCZ Authority shall be to attract investments, establish competitive agricultural, industrial and services projects, and increase Egypt\u2019s share in the international trade. To achieve such goals, SCZ Authority is required to perform its mandate according to the highest international standards, unify administrative authorities, provide services and utilities according to the highest technical specifications and standards, apply the necessary incentives and exemptions, and provide trained manpower.<\/p>\n 3.6<\/strong> SCZ Authority shall have the powers necessary to enable it to achieve its goals, among these powers are the following:<\/p>\n 4.1<\/strong> The SCZ Authority shall have a chairman and a deputy or more, to be appointed for a period of three years by virtue of a presidential decree. The chairman shall be responsible for representing the SCZ Authority before third parties and judiciary bodies, and implementing the decisions adopted by its board of directors.<\/p>\n 4.2<\/strong> The board of directors shall be appointed by the Prime Minister, and shall comprise the chairman and its deputy(ies) and 9 members. 4 of the members shall represent relevant Ministries and Governorates, and 5 of the members\u00a0are of financial, technical and legal expertise.<\/p>\n 4.3<\/strong> The SCZ Authority is currently chaired by Mr. Ahmed Mahmoud Othman Darwish by virtue of the Presidential Decree no. 442 of 2015. The same Decree appointed Mr. Abdel Kader Mohamed Abdel Kader Darwish as his deputy for a period of three years.<\/p>\n 4.4<\/strong> The Prime Minister Decree no. 3300 of 2015 was issued to appoint the board members of SCZ Authority. This decree was later amended by virtue of the Prime Ministerial Decree no. 193 of 2016 mandating the invitation of the Minister of Transportation and the head of the Suez Canal Authority in all board meetings of the SCZ Authority. The below graph shows the board members of the SCZ Authority as well as the mandated invitees:<\/p>\n 4.5<\/strong> The board of the SCZ Authority is delegated with the authorities of all relevant ministers, governors and pubic officers necessary to practice its mandate, except for the ministers of defense, interior, foreign affairs and justice. The board shall be competent with the following:<\/p>\n a. Setting up the conditions and criteria and the rules for urban planning, building, and zoning in a way satisfying international specifications and enhancing competitiveness with similar economic zones.<\/p>\n b. Setting up the conditions and criteria which must be fulfilled for licensing projects inside the SCZone.<\/p>\n c. Determining the conditions and criteria which must be fulfilled by a project to obtain environmental license.<\/p>\n d. Deciding the systems relating to the management of the maritime ports and airports in a way to ensure its effectiveness according to the international standards.<\/p>\n e. Approving the regulations relating to labor and social insurance system inside the SCZone.<\/p>\n f. Approving and implementing the manpower training system.<\/p>\n g. Setting up the system and procedures relating to importation and exportation from and to the SCZone, without being restricted by the regular import and export laws and regulations.<\/p>\n h. Setting up a system to ensure the effectiveness and swiftness of the authentication and notary public procedures.<\/p>\n i. Issue the internal financial, administrative and technical rules including the tenders and bids regulations.<\/p>\n 5.1<\/strong> The board of the SCZone shall be the competent authority to issue all licenses required for establishing and running all kind of business and activities inside the SCZone. It will be specifically competent to issue the following licenses:<\/p>\n 6.1<\/strong> One of the main features of the special economic zones is that they will have special taxation and customs systems which are characterized to be more flexible and autonomous. a. Effective and swift checking procedures.<\/p>\n b. Clear and transparent valuation rules according to the international trade agreements.<\/p>\n c. Streamlined customs clearance procedures.<\/p>\n d. Comprehensive and accurate laboratory checking at one location.<\/p>\n e. Accurate and effective procedures for issuing and checking certificate of origins.<\/p>\n f. Clear rules for determining the imported component percentage for products entering the local market.<\/p>\n 6.3<\/strong> A special customs administration shall be established inside the SCZone by virtue of a decision from the Minister of Finance. This administration shall be supervised by a supreme customs committee to be established by the chairman of the SCZone. This committee shall be competent to implement the policies and decisions of the SCZ Authority in this regard. 6.4<\/strong> The SCZone shall have a special taxation system to be issued by the board of director after the approval of the Minister of Finance. This system shall include the following: 6.5<\/strong> A supreme taxes committee will be established by a decision of the chairman of the SCZone after the approval of the Minister of Finance. This committee shall be responsible for implanting the tax system at the SCZone.<\/p>\n 7.1<\/strong> Projects may not be established in the SCZone unless a prior written approval from the board of the SCZ Authority is obtained. The application for incorporation must include, inter alia, the following information:<\/p>\n 7.2<\/strong> The project shall take one the corporate structure provided for in the Egyptian Companies Law no. 159 of 1981 which includes:<\/p>\n 8.1<\/strong> Law 83\/2002 sets a number of incentives and guarantees for projects established inside the special economic zones. The following summarizes such incentives and guarantees:<\/p>\n Companies established in the SCZone are exempted from sales taxes, stamps duty tax and the state resources development tax. The SCZone shall operate under a more flexible labor and employment rules. Limited period employment contract shall terminate automatically by the expiry of its duration. If the parties continue to execute the contract after its expiration, it will be renewed for another period similar to the period of the expired contract. This is different from the general rule under the Egyptian Labor Law no. 12 of 2003 (“Labor Law”) which provides that in such case, the contract will convert into an unlimited one. Entities operating within the SCZone can import or export all its needs from raw materials, equipment, tools, and spare parts for the construction, expansion or operation of its project, without prior permit or being registered in the importers register. At the same time, they may export their products without permit or prior approval, and without being registered in the exporters register. The SCZone has an independent dispute settlement center (\u201cCenter\u201d), which shall be competent to settle the following disputes:<\/p>\n If you have any questions regarding this paper, feel free to contact us<\/a>.<\/p>\n Download this report in PDF format<\/a><\/p>\n In 9\u00a0August 2015, after three days from the inauguration of the New Suez Canal, President Abdel Fattah El-Sisi issued Decree No. 330\/2015 declaring the areas adjacent to the Suez Canal as a special economic zone (the \u201cSCZone Decree\u201d). This zone shall be governed by Law no. 83 of 2002 on Special Economic Zones (“Special Economic Zone Law” or “Law 83\/2002”) and its Executive Regulations issued by virtue of the Prime Ministerial Decree no. 1625 of 2002.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"yoast_head":"\n2. SCZone Borders<\/h3>\n
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3. SCZone Authority<\/h3>\n
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4. Board of Directors of SCZone Authority<\/h3>\n
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\nAhmed Fekry Abdel Wahhab<\/li>\n<\/ul>\n<\/li>\n\n
5. Licensing<\/h3>\n
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6. Customs and Taxation<\/h3>\n
\nSpecial Customs System
\n6.2<\/strong> SCZone shall have a special customs system to be set by the board after the approval of the Minister of Finance. This system shall include the following:<\/p>\n
\nSpecial Taxation System<\/p>\n
\na. The special rules related to the tax filing and the related documentary and financial analysis.
\nb. The conditions and criteria that must be met by auditors who can register at the auditors list at the SCZone.
\nc. Tax examination rules.
\nd. Deduction and withdrawals systems.
\ne. Rules and procedures for deciding and disputing the taxes.<\/p>\n7. Establishing a Project inside SCZone<\/h3>\n
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\n7.3<\/strong> A project may also take the form of a sole proprietorship or branches of foreign companies. The board of the SCZ Authority shall issue model articles of associations of the companies and determine the documents necessary for completing the incorporation process.<\/li>\n<\/ul>\n8. Investment Incentives and Guarantees<\/h3>\n
Taxes and Duties<\/h5>\n
\nEntities operating in SCZone are allowed to import machines, devices, raw materials, spare parts and any other materials or components necessary for performing their licensed activities free of any customs, sales tax and any other taxes or duties. However, customs tax, sales tax and all other taxes and duties shall be imposed on the imported components of the products produced by these entities only when they enter the Egyptian local market.
\nAlso, all kinds of cars and vehicles used in the production or services activities of these projects are exempted from all taxes and duties.
\nIt has to be noted that Law 83\/2002 (Special Economic Zones Law), before its amendment in 2015, used to provide for reduced corporate as well as income taxes for project inside the special economic zone. These reductions will continue to apply only on projects previously established at the North-West Suez Economic Zones (the one replaced by the SCZone as mentioned above at point 3.3) until the expiry of its current license. Projects to be established anew or to be renewed in the SCZone will not benefit from such reductions and shall be subject to the regular tax prices.<\/p>\nLabor and Social Insurance<\/h5>\n
\nEach of the employer and the employee may terminate a definite employment contract before the lapse of its period with 60 days prior notice.
\nIn case of unlimited employment contract, each party shall have the right to terminate it, at any time, with 90 days prior notice. The employer here is not restricted by the limited causes of termination stipulated in the Labor Law. Employees, however, shall be entitled to compensation in case there is no mistake attributed to them justifying such termination. The compensation will not be less than that provided for in the Labor Law.
\nThe internal labor regulations of entities operating within the SCZone shall be approved by the competent department affiliated to the SCZ Authority.
\nThe board of the SCZ Authority is competent to issue the work permits for foreigners after obtaining the security approvals and to determine the work permits\u2019 requirements. Also, the SCZ Authority has the right to exempt some projects, entities and companies from the maximum percentage of foreigners determined by the law.
\nThe SCZ Authority is also permitted to establish a special system for social insurance more beneficial for employees who working in the SCZone.<\/p>\nExports and Imports<\/h5>\n
\nProducts imported from the SCZone inside the country shall be treated as if they are imported from abroad. Accordingly, they shall be subject to customs duties, sales taxes and all other taxes and fees. Products exported from inside the country to the SCZone shall be treated as if they are exported abroad, and shall fulfill all export and monetary requirements.<\/p>\nSettlement of Disputes<\/h5>\n
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\nThe Center shall only have the jurisdiction to settle the above disputes in case the parties agrees to this effect, or in case the residence, work premises, head office or branch of one or all parties to the dispute is located in the SCZone.<\/li>\n<\/ul>\nOther Incentives and Guarantees<\/h5>\n
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\nThere are also further non-tax incentives for labor-intensive projects and investments in remote areas and in certain sectors such as energy, agriculture, logistics, and transportation. Such non-tax incentives include:<\/li>\n
\nThe application of such incentives is conditional upon the starting of the production.<\/li>\n<\/ul>\n
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