Investment Incentives Law no.8

The Government of Egypt (GoE) offers a no. of investment incentives by setting a series of investment laws related to tax reduction, tariff exemptions and granting numerous guarantees to new investors. GoE offers investors the following advantages in accordance with Law No.230 amended by the investment incentives and Guarantees Law No.8/1997.
  • Enterprises could be wholly owned by foreigners
  • Guarantees against nationalization or expropriation of the project.
  • Output of the project is not subject to price control.
  • Projects are allowed to repatriate their capital and profits.
  • Foreign experts’ salaries are exempted from income tax if they stay in Egypt for less than one year.
  • Productive assets and building materials imported for establishing the project are subject to a unified import tax of 5%.
  • Tax exemption are granted at the end of the first fiscal year from the activity starting date as follows:
  • 5-year exemption of the projects set up in the Old Valley.
  • 10-year exemption of the projects established in the industrial zones of new communities or remote areas.
  • 20 year exemption of the projects set up in the New Vally (hka, East Owainat, P{aris, Kharga, East Farafra and Siwa)
  • Life exemption of the projects established in free zones.

Exemptions Granted for Contracts

  • All contracts related to companies’ activities such as (goods, land ownership transfer, loans and mortgage) are exempted from the financial stamp and notarization duties for three years from the date of registering companies in the commercial register.
  • The Egyptian stock companies, which are subject to Law No. 8/1997 and register their shares in the Egyptian stock markets, are exempted from profit tax equal to loan or discount rate set by the Central Bank of Egypt.
  • Interests on bonds issued by the stock companies which are subject to Law 8/1997 are exempted from income tax resulting from the moveable capital provided that bonds are offered for public subscription and are registered in the Egyptian stock market.

Package of incentives for future assets transfer.

  1. Optimal Investment
    Excess lands and malfunctioning companies are to be transferred to the holding company concerned prior to selling to reduce the size of company and make it more lucrative economically.
  2. Valuation of Assets: 
    Details of incentives related to the valuation of assets vary depending on the company’s activity whether trading , transportation or industrial activities. The common incentives applicable to all companies are:
  • Valuation of the utilized land is made using the price per square meter in the nearest new industrial zone. Terms of sale for these zones are handed to the investor conditional on his acceptance to maintain the labor force of the company under sale.
  • Valuation of buildings at a minimum book value of LE150 per square meter.
  • Valuation of machinery, equipment and furniture at book value.
  • Valuation of inventory and bonds at book value.
  1. Financial Incentives
    One of the major incentives offered to investors in the readiness of the government to transfer the outstanding debt to one of the banks or other creditors in the accounting books of the company under sale to the holding company. This aims at providing a healthy investment opportunity for the company after sale.
  2. Other incentives
    The investor can enjoy tax exemptions and other incentives stipulated in the Investment Incentive Law no.8/1997. The approved incentives clearly stipulate that all government entities are bound to abide by all the contractual commitments related

Laws & Regulations

  1. Business Laws
  • Amendment to the investment law and corporate law
  • Corporate Law
  • Environmental Laws
  • Intellectual Property Rights Law
  • Investment Guarantees and Incentives Law
  • Labor Law
  • Land &Real estate ownership laws
  • Special economic zones law
  • Tax laws
  • The commercial agency law
  • The commercial register law
  1. Trade Laws:
  • Anti -Dumping Law
  • Competition and anti- Trust Law
  • Customs Laws
  • Export Promotion Law
  • Import & export regulation law
  1. Financial Laws:
  • Banking laws
  • Capital Market law
  • Central securities Depository Law
  • General Budget
  • Insurance Law
  • Money Laundering Law
  • Mortgage Law
  1. Other Laws

Free Zones

Egypt has been advocating the creation of free zones since the early 1970s in an attempt to increase exports ,attract foreign investment, introduce advanced technology and create more job opportunities.
Free zones are located within national territory but are considered offshore areas. Investors operating inside the free zones export more than 50% of their total production .Among the free zone incentives and guarantees are a lifetime exemption from all taxes and customs; exemption from all import/ export regulations; the option to sell a certain percentage of production domestically if custom duties are paid; and limited exemptions from labor provisions.
To facilitate import/export procedures, Free zones are usually located adjacent to sea ports and airports. There are two different kinds of free zones; public and private:

  • Public free zones
  • Private free zones

The free zones in Egypt are the following:

  • Alexandria public free zones
  • Nasr City public free zone
  • Port said public free zones
  • Suez public free zones
  • Ismailia public free zone
  • Damietta public free zone
  • Shebin El Kom Public free zone
  • Keft public free zone
  • Media production city free zone.

Facts about doing business in Egypt
From a favorable regulatory climate to strong economic fundamentals, here are some key facts about doing business in Egypt

Low taxes and customs :

Tax Reform: As part of its on going efforts to make Egypt the most attractive investment destination in the MENA region, the government has clarified the tax code and cut corporate tax rates from 42% to 20% and personal tax rates from 32% to 20%. Other new administrative changes include the new random audit system and having the tax authority personally oversee the largest corporate taxpayers

Customs reform

In order to improve Egypt’s standing as a global manufacturing hub, the government reduced the weighted average tariff rate from 14% to 6.9%, streamlined tarrif bands, reduced the no. of tariff categories from 27 to 6 and also reduced the no. of articles covered under the customs act by more than half.

Financial Services

Reforms instituted in this sector over the past several years have positively impacted the economy, placing increased emphasis on the role of the Central Bank of Egypt and consolidating the banking sector through a variety of methods ranging from mergers to privatizations. The Central Bank of Egypt has created a sounder and more efficient banking system by hiking capital reserve regulations, encouraging mergers and acquisitions, developiung its regulatory and supervisory apparatus and addressing the legacy of non performing loans.
The sectors saw further growth of nonbank financial products including mortgage finance, financial leasing fixed income products, factoring and insurance. Anew single regulatory body will soon have responsibility for regulation and oversight of all non- banking financial activities.
The Capital Market Authority (CMA) remained strong with both the oldest and one of the newest exchanges in MENA.

Enabling legislation

The regulatory and institutional frameworks governing investment in Egypt have seen significant overhauls in the past several years. The government has taken bold steps to slash red tape and make Egypt – one of the world’s oldest economies- also one of the easiest in which to do business. Some and protections based on the examples of reforms and protections based on the concepts of property rights protections, equality and ease of doing business.