New Investment Law No 72/2017

On the 31st of May 2017, a new law was introduced to govern domestic and foreign investment
projects, namely Law No 72/2017.
The New Investment Law replaces the Investment Guarantees and Incentives Law No 8 for 1997 and aims to serve as an incentive for all potential investors by facilitating the process of investing in Egypt. It should be noted however, that article 2 of the new law emphasizes that it does not override tax privileges, exemptions or safeguards granted to companies created before this law, until their
term expires.
The new law encourages fair competition, consideration of social and environmental issues, transparency, stability and, most importantly, the facilitation of investment procedures. It also introduces three forms of incentives:

General Incentives

Applicability: All investment projects, except for those set up in free zones and those issued a certificate by the Authority’s Chief Executive Office

Benefits
– For the first five years of registration, the documents, loan agreements and pledge contracts of such companies are exempt from stamp duty tax and notary public fees
– Projects are exempt from land registration fees
– Projects can enjoy a unified flat customs duty rate of 2% on all machines and equipment needed for establishing the project

Special Incentives

Applicability: Companies that fit into either sector (A) or (B) (as determined by the relevant Minister) and association projects issued a certificate by the Authority’s Chief Executive Officer and satisfy the
following conditions:

– Be incorporated (within a maximum of three years) to conduct the investment project
– Keep regular accounting books

Benefits
Investment projects established after this Law enters into force and
according to the investment map shall be granted an investment incentive
in the form of a deduction on taxable net profits, in the following manner:

– 50% deduction on the investment costs of projects set up in underdeveloped geographic locations (Sector (A) projects)

– 30 % deduction on investment costs for projects in Sector (B)
(labor intensive projects, small and medium enterprises, renewable energy projects, national and strategic projects, tourism projects, electricity generation and distribution projects, projects that export their production outside of Egypt, automotive projects, certain chemical industries, certain pharmaceutical industries, food and agricultural projects and, finally, the engineering, textile and leather industries).

Additional Incentives

Applicability: Companies issued a certificate by the Authority’s Chief
Executive Officer

Benefits

Allowing projects to have their own customs gates for imports and exports

– Government aid for the costs associated with introducing utilities to the land allocated to the project, and with the cost of technical training for employees

– Refunding half of the fees paid for the allocation of land for industrial projects if they commence production within two years of allocation. The cabinet may allocate free land for specific strategic projects
Finally, the law guarantees the following to all types of investments:
a) Fair and equal treatment to both foreign and Egyptian investors
b) Protection from coercive or discriminatory measures on any invested capital
c) Residency permits for foreign investors throughout the term of their investment project
d) Protection against nationalization – Article 4 states that investment projects will not be nationalized and can merely be used for the public utility if fair compensation is paid in advance.
e) Protection against the seizure of money without a court judgment, excluding amounts due for tax and social insurance contributions.
f) Protection against the withdrawal of licenses without obtaining approval from GAFI and giving the investor prior notice and time to cure the defect
g) The right to set up and fund projects from abroad using foreign currency
– as well as the right to transfer proceeds of liquidation aboard (without prejudice to the rights of third parties)
h) The facilitation of liquidation procedures, ensuring that they are concluded within 120 days
i) The importation of machines, equipment and raw materials needed for the purpose of establishing, expanding and operating the investment project without an import license. Projects also have the right to export products without a license
j) The right to have workforce which consists of up to 10% foreign workers. This number can be increased to 20% if it is not possible to find national workers with the required qualifications. Further exceptions can be made provided that training is offered to national laborers.

Finally, the law has also created a more rigorous corporate social

responsibility scheme, allowing projects to set aside up to 10% of their net income profit (deductible for annual corporate tax) to participate in one of the following fields:
– Environment protection and enhancement
– Health, social, and cultural services
– Vocational education.
– Research funding or leading awareness campaigns in collaboration with universities or scientific institutions
– Scientific training and research

Types of Investment in Egypt 

The New Investment Law provides for four types of investments: inland investments, investment zones, technological zones and the free zones

1 | Inland Investments

Internal or inland investments can be set up in any area other than in investment and free zones. Projects here must comply with all relevant laws, and they do not benefit from additional incentives other than the exceptions introduced in the New Investment Law. One of the methods of facilitation set up by the new law is that of “certification offices”.

These offices assure the quick issuance of the certificates required to confirm the status of investment projects.
Additional incentives include:
Investment projects established after this Law enters into force and according to the investment map shall be granted an investment incentive in the form of a deduction on taxable net profits, in the following manner:
– 50% deduction on investments made in underdeveloped areas
– Government support for the cost of introducing utilities to a new project
– Returning to investors half of the amounts paid to acquire land for
industrial projects if production begins within two years Additionally, inland projects can sometimes develop into private free zones if they prove to be active and half of their production is exported.

2 | Investment Zones

Investment zones were first introduced by Law No 19 of 2007 and later explained in Prime Minister Decree No 1675 of 2007, which currently regulates these zones.

GAFI emphasized that these zones are a key instrument in the government’s plan to support Egypt’s economic growth by facilitating interaction with investors. They aim to establish integrated clusters in all fields, widen the scope of economic and social development across the
country, and develop small and medium enterprises.

Investment zones come with fewer limitations than free zones, in addition to many incentives, for example exemption from stamp duty and documentation tax for the first five years of their registration, and prevention from being nationalized or confiscated.

It should also be noted that companies in investment zones are each managed by a board of directors, who have the exclusive power to approve investment projects. Consequently, no administrative party can freeze the company’s assets, intervene in their pricing or cancel the use of their real estate license.

There are currently 13 investment zones in different fields:

a) CBC Egypt for Industrial Development specializing in building materials, located in Giza
b) Polaris International Industrial Park, specializing in textile industries and located in Giza
c) The Industrial Development Group, which specializes in auto-feeding industries and is located in Giza
d) Pyramids Industrial Parks, which are made up of engineering industries in Sharqiya

e) Al-Tajamouat Industrial Park, which works with textiles and RMG in Sharqiya
f) Two Small and Medium Enterprises: Meet Ghamr in Dakahlia and Al-Saf in Giza
g) City of Scientific Research and Technology Applications for nanotechnology and biotechnology in Alexandria
h) Three higher education and scientific research industrial zones: Cairo University in Giza, Ain Shams University in Qalyubia and Fayyoum University in Fayoum
i) City of Scientific Research for Information Technology in Maadi
j) Cairo Airport Investment Zone, which provides commercial services in
Cairo Airport

3 | Technological Zones

The New Investment Law also permits the Prime Minister to license the establishment of Technological Zones. These are to cover the fields of communication and information technology, which includes designing and developing electronics, data centers, programming development,
technological education, and other related areas. Such zones are managed solely by a board of directors – again meaning that their approval for any projects will suffice. The New Investment Law
makes it clear that the tools and equipment required for the functioning of these zones are not subject to tax and custom duties. The board of directors is also responsible for setting the controls and criteria required to conduct activities, as well as approving the proposed activities within the boundaries of the zone. More information on the properties of technological zones can be found in our comparative tables below.

4 | Free Zones

In addition to the above, the new law has reintroduced private free zones after their ban in the 2015 amendments. Free zones consist of Egyptian shareholder companies, set up on Egyptian land, following the laws of the country namely:
– Obtaining a commercial register
– Obtaining a tax card
– Obtaining the correct operating and building licenses
– Fulfilling their income tax obligations
– Providing social insurance for their employees
They must also comply with Ministerial Decrees and Laws, as well as decisions issued by the National Bank with regards to currency use. In summary, they must comply with the laws and regulations found in:

a) Law No 72/2017 Promulgating the Investment Law Decree No 48/2008
b) Law No 21/1958 Article 23 on the regulation of Egyptian Industry
c) Decree No 770/2005 Article 51
d) Decree No 770/2005 Article 39

Free zones can be either public or private and can be established in most investment sectors excluding:

a) Oil, fertilizers and steel production
b) Transportation, liquidation or production of natural gas
c) Heavy energy usage systems
d) Alcohol and wine production
e) Production of weapons, ordnance or explosives

All products (with a few exceptions) imported or exported by projects inside free zone are not subject to importation and exportation regulations otherwise applied outside the free zones, nor are they subject to taxes such as custom duty taxes and VAT.

Likewise, investment projects established in these free zones will not be subject to taxes imposed on distribution of dividends. Instead, companies are to pay certain charges, as will be seen below. These charges will be paid to the National Bank through the Investment Authority, similar to the taxes that are paid to the Ministry of Finance from inland investment projects

Free zones also benefit from the following:

a) No limitations on transferring profits or investing money
b) The right to import and export without the need to maintain records in the Importers Register
c) All equipment, machinery, and transportation necessary to carry out activities in the free zones are exempt from customs duties, VAT and other taxes and duties (except for cars)
d) Any property or funds cannot be detained, seized, retained in protective custody, frozen or confiscated
e) No administrative body will interfere in the pricing of any products nor in
determining their profits.

Products from these projects are however, subject to the general rules applicable to importation from abroad. Products containing both local and foreign components will be taxed according to the value of their foreign components at the time of production. As the new law aims to be environmentally conscientious, any waste resulting from the operation of projects in the free zone are permitted into the country for the purposes of recycling (subject to their compliance with the safety methods described in the Law on the Environment promulgated by Law No 4 of 1994).

Setting up Free Zones in Egypt

Free zones are divided into public and private zones. There are nine public free zones throughout Egypt:
– Alexandria Public Free Zone
– Nasr City Public Free Zone
– Port Said Public Free Zone
– Damietta Public Free Zone
– Keft Public Free Zone
– Media Public Free Zone
– Shebin el-Koom Public Free Zone
– Suez Public Free Zone
– Ismalia Public Free Zone

Discussions are currently underway to add 3 new zones:

– Badr City Public Free Zone
– El Minya Public Free Zone
– Nuweiba Public Free Zone in South Sinai Governorate

These free zones are supplied with facilities and services such as electricity, water, sanitation, telecommunication, and natural gas. They were set up in the aforementioned places due to their proximity to sea and air ports as well as to large cities. The management of any public free zone
is carried out by a Board of Directors. The Chairman of the board will be appointed by GAFI’s Chief Executive Officer, who is to be approved by the competent minister. Board members must disclose all their funds to the Supreme Council of Investment, and will be supervised by an independent
entity.

This board of directors of the public free zone is authorized to issue final approval on projects within the zone (or within any private free zone located in their geographic domain), in addition to being responsible for issuing licenses to authorize these projects. These licenses must describe the purpose and term of the project as well as the amount of financial guarantee to be paid by the licensee. This license must also state the realestate properties needed to carry out the relevant project. To determine this, the investor must approach Zone Management within 30 days of receiving consent to conduct the project. Upon the termination of the project, the land allocated must be cleared of occupancy – which includes removing any buildings or facilities at the investor’s own expense.

Furthermore, GAFI may set up private free zones to hold one project each. GAFI Decree No 48/2008 Article 2 sets out that Large Industrial Projects may set up private free zones, as opposed to setting up within the boundaries of a public free zone, if the following conditions are satisfied:

a) There is no appropriate existing public free zone and the proposed private zone is adequate for the economies of the project. This includes geographical necessities, such as working close to raw materials, an export port, or a certain route or highway necessary for textile transport. Projects may also require private free zones due to the nature of their products or raw materials namely being of a large size, heavy weight or short shelf life.

b) The project is a holding or limited liability company. It can also be a branch of a foreign company or a branch of one of the companies operating in the domestic investment system.
c) The paid capital or issued capital for the project is no less than 10 million dollars. Investment costs should be no less than 20 million dollars, or the equivalent in foreign currency. The capital must be paid within three years of licensing.

d) The number of permanent employment is no less than 500 workers, employed within the first year of operation (a signed document will need to be provided to ensure this).
e) No less than 75% of goods must be exported, with the exception of ready-made clothing and furnishing, where 95% of goods must be exported. In the strategic and mining industries, export rates are to be decided by the relevant minister.
f) Proof of ownership for the project is presented, ensuring that the surface area of the site is no less than 20 meters squared.
g) Only 20% of the materials used can be locally sourced, however this excludes extracted raw mineral products.
h) The project provides a timeline scheduling the start of activity and showing commitment to the rules in this decree. This must also indicate that the project has not gone over the time limit specified except with the approval of the GAFI.
i) The project gains approval from the competent authority (such as the Ministry of Transport, the Petroleum Authority, the Port Authority) and the environmental agency to set up the project on its merits. This must take place before the decision to license is approved.
j) The project has an adequate power source and that it will comply with the resolutions of the Supreme Council of Energy.

k) It has received security clearances for foreign shareholders and partners, if applicable.
l) The project presents a letter of indemnity to GAFI with the value of 50,000 dollars for industrial projects and 100 000 dollars for service projects for the duration of their operation.

GAFI has also produced guides indicating the required documents and steps for setting up free zones:

1. The investor or their agent submits a ‘Form of Establishment of Project’ (available at GAFI).
2. The Permanent Technical Committee of the Free Zones Affairs grants preliminary approval on establishing the project.
3. The investor submits a check amounting to 10% of the rent value, with a minimum of $1000.
4. The investor fills in the security investigation forms for any foreign partners.
5. The investor submits a request and attaches a check with the rest of the rent value, as well as a pledge to leave the site if the request is denied.
6. The investor receives final approval from the board of directors of the respective public free zone.
7. The investor submits the company’s Articles of Incorporation.
8. The investor registers at the Commercial Register, obtains a tax card, and their company is published in the Investment Gazette.
9. The investor receives 3 draft copies of the decree issued to them by the head of the Free Zone.

Investment Zones Comparison Table

Property Free Zone Inland Investment Investment Zones Technological Zones
Capital For Private Free Zones, the paid capital or issued capital for the project must be no less than 10 million dollars. Investment costs should be no less than 20 million dollars, or the equivalent in foreign currency. The capital must be paid within three years of licensing. The minimum capital required and the percentage specified from the paid up capital shall be paid in accordance with the provisions of the Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies promulgated by the Law No. 159 of 1981. The Board of Directors of the Zone shall draw up an action plan for the Zone, prescribing the controls and rules required to conduct the activity. This plan is to be approved by the Authority’s Board of Directors. The Board of Directors of the Zone shall set the controls and criteria required to conduct the activity and it shall approve the establishment of Projects within the boundaries of the Zone.
Date of establishment First established in 1902, the previous governing law was that of the year 1952, but currently Law No. 72 of 2017 First established in 1971 and currently governed by Law no. 72 of 2017 Investment Zones were created under Law no.19 of 2007 and its Executive Regulation no. 1675 of 2007 , which introduced them as new investment schemes unprecedented in the Investment Guarantees and Incentives Law (Investment Law no. 8 of 1997) First established in 2001 and then created under Law no. 72 of 2017
Import system/ access to local market Imports from the Free Zones into the Country shall be subject to the general rules applicable to importation from abroad. As an exception, the ingress of the materials, waste, and scraps resulting from the activities of the projects operating within the Free Zones into the country is permitted whenever such ingress is for the purpose of disposal or recycling. All projects shall have the right to import, whether directly or through third parties, the raw materials, production supplies, machinery, spare parts and transportation that suit the nature of their activity, which are required for the establishment, expansion, or operation thereof, without the need to be registered in the Register of Importers. All projects shall have the right to import, whether directly or through third parties, the raw materials, production supplies, machinery, spare parts and transportation means that suit the nature of their activity, which are required for the establishment, expansion, or operation thereof, without the need to be registered in the Register of Importers. All projects shall have the right to import, whether directly or through third parties, the raw materials, production supplies, machinery, spare parts and transportation means that suit the nature of their activity, which are required for the establishment, expansion, or operation thereof, without the need to be registered in the Register of Importers.

 

Property Free Zone Inland Investment Investment Zones Technological Zones
Import
system/
access
to local
market
Subject to the provisions
provided for under the laws
and regulations concerning
the prohibition of dealings
in certain commodities or
materials, the commodities
imported for the purposes of
pursuing their activities shall
not be subject to the rules
governing import and export,
or to the customs procedures
related to the exports and
imports. Such commodities
shall not be subject to
customs duties, the valueadded Tax, or other taxes and
duties.
The Authority may allow
the temporary entrance of
the local and foreign goods,
materials, parts, and raw
materials, owned by the
project or by third parties,
from inside the country
to the Free Zone, on a
temporary basis. This can
be done to repair or conduct
manufacturing processes
on said items, however they
must then be returned to the
country, without them being
subject to the applicable
importation rules
Property Free Zone Inland Investment Investment Zones Technological Zones
Exports
/ access
to Local
market
Subject to the provisions
provided for under the laws
and regulations concerning
the prohibition of dealings
in certain commodities or
materials, the commodities
exported abroad by the
Free Zone projects for the
purposes of pursuing their
activities shall not be subject
to the rules governing import
and export, or to the customs
procedures related to exports
and imports.
Exportation of the production
supplies from the local
market to the production
projects within the Free Zones
shall be subject to the rules
defined by a decision issued
by the minister concerned
with foreign trade affairs,
in agreement with the
Competent Minister and the
Minister of Finance.
The Competent Minister
shall, in agreement with the
minister concerned with
industry affairs, set the rules
for the industrial production
Projects shall have the right to
export their products, directly
or through an intermediary,
without a license and without
the need to be registered in
the Register of Exporters.
Investment projects which
carry out exportation, whether
directly or through third
parties shall provide the
Authority with a quarterly
report on the quantities
imported or exported.
Projects shall have the right to
export their products, directly
or through an intermediary,
without a license and without
the need to be registered in
the Register of Exporters.
Investment projects which
carry out exportation, whether
directly or through third
parties, shall provide the
Authority with a quarterly
report on the quantities
imported or exported.
Projects shall have the right to
export their products, directly
or through an intermediary,
without a license and without
the need to be registered in
the Register of Exporters.
Investment projects which
carry out exportation, whether
directly or through third
parties, shall provide the
Authority with a quarterly
report on the quantities
imported or exported

 

Property Free Zone Inland Investment Investment Zones Technological Zones
Exports
/ access
to Local
market
projects to conduct their
activities, in particular, the
obligations of these projects
in terms of the export rates.
– No less than 80% of goods
must be exported, however
this does not apply to
strategic projects of national
importance.
– Only 30% of the materials
used can be locally sourced
Taxes All the projects investing
under the Free Zones
Regime shall be subject to
customs and tax control in
accordance with the rules
defined by a decision issued
by the Authority’s Board of
Directors, in coordination
with the Egyptian Customs
Administration and Tax
Authority
Subject to the provisions
provided for under the laws
and regulations concerning
the prohibition of dealings
in certain commodities or
These taxes are imposed
from the beginning of the
project and fall under the
country’s investment law.
They are foregone in some
industrial areas under
certain conditions. It must
be noted that unregistered
industries make up 50% of
the nation’s economy
– Taxes are to be paid
at least five years after
establishment
– Taxes are only imposed if
the project makes earnings
Projects established within
the Technological Zones shall
enjoy the special incentives
in the form of a discount off
the taxable net profits, in the
following manner:
1) A 50% discount off the
investment costs of Sector (A)
2) A 30% discount off the
investment costs of Sector (B)
The investment incentive
shall not exceed 80% of
the paid up capital until
the activity start date,
Projects established within
the Technological Zones shall
enjoy the special incentives
in the form of a discount off
the taxable net profits, in the
following manner:
1) A 50% discount off the
investment costs of Sector (A)
2) A 30% discount off the
investment costs of Sector (B)
The investment incentive shall
not exceed 80% of the paid up
capital until the activity start
date, in accordance with the

 

Property Free Zone Inland Investment Investment Zones Technological Zones
Taxes materials, the commodities
exported abroad by the
Free Zone projects or
imported for the purposes
of pursuing their activities,
shall not be subject to the
rules governing import and
export, or to the customs
procedures related to the
exports and imports. Such
commodities shall not be
subject to customs duties,
the value-added tax, or
other taxes and duties.
With the exception of
passenger vehicles, all tools,
supplies, machinery and
transportation necessary
for exercising the activity
licensed for the projects
existing within the Free
Zone shall be exempt from
customs duties, VAT, and
other taxes and duties
Projects established in the
Free Zones, and their profits,
shall not be subject to the
provisions of the applicable
laws on taxes and duties
– Losses are carried over
through fiscal years and may
affect the project’s tax rates
in later years
in accordance with the
provisions of the Income Tax
Law.
The discount period should
not exceed 7 years from the
activity startup date.
provisions of the Income Tax
Law.
The discount period should
not exceed 7 years from the
activity startup date.

 

Property Free Zone Inland Investment Investment Zones Technological Zones
Taxes in Egypt. However, such
Projects shall be subject to
the following treatment:
I- Projects established in
Public Free Zones shall be
subject to:
1- A fee of (2%) of the
commodity value upon
ingress (CIF) for the
storage – projects and a fee
of (1%) of the commodity
value upon egress (FOB)
for manufacturing and
assembly projects.
2- A fee of (1%) of the
total revenues for projects
whose main activity does
not require the ingress or
egress of goods, based on
the financial statements
accredited by a certified
accountant.
II. Projects established in
Private Free Zones shall be
subject to:
1- A fee of (1%) of the

 

Property Free Zone Inland Investment Investment Zones Technological Zones
Taxes total revenues realized for
manufacturing and assembly
projects upon exporting the
goods abroad, and (2%) of
the total revenues realized
for manufacturing and
assembly projects upon
exportation of the goods
abroad, and (2%) of the
total revenues realized from
these projects upon the
ingress of commodities into
the country.
2- A fee of (2%) of the total
revenues realized, in relation
to other projects set forth in
(I).
The proceeds of the duties
set forth in (I) shall paid to
the Authority.
The proceeds of the duties
set forth in (II) shall be
distributed equally between
the Ministry of Finance and
the Authority.
In all cases, projects
established within Public
Property Free Zone Inland Investment Investment Zones Technological Zones
Taxes and Private Free Zones
shall pay annual fees to the
Authority for which may
not exceed 0.001% of the
capital, at a maximum of one
hundred thousand pounds
(EGP 100,000)
This fee may be paid in
the equivalent currency
specified by the Competent
Minister.
Projects shall submit
financial statements,
accredited by a certified
accountant, to the Ministries
of Finance and Investment.
Workforce A large work force of at least
500 permanent workers
is required for private free
zone projects.
Property Free Zone Inland Investment Investment Zones Technological Zones
Surface
Area
Private free zones must
cover at least twenty
thousand square meters.
No set requirement No set requirement No set requirement
Customs/
Machinery
and spare
parts
Customs taxes shall apply
to the goods imported from
the Free Zone to the local
market as if they were
imported from abroad.
As for products imported
from the Free Zone
projects containing local
and foreign components,
the applicable customs tax
shall be calculated based
on the value of the foreign
components at the time
of their egress from the
Free Zone into the country,
provided that the customs
tax due on the foreign
components shall not
exceed the tax due on the
final product imported from
abroad.
Foreign components means
all imported foreign parts
and materials as they are at
their ingress into the Free
There is a unified custom
rate of 2% on all machines
and equipment required for
establishing the projectIf the company exports
goods, it can also import
them if it presents a letter
of indemnity for 25% of
the customs fee and the
VAT. The percentage is
reimbursed upon export.
Projects shall be subject
to the rules regulating
temporary customs
clearance and the drawback
set forth in the regulating
laws, regulations, and
decrees.
All tools, supplies, and
machinery required to
conduct the licensed
activity in all types of
projects by all kinds of
the Projects established
within Technological Zones
shall not be subject to
taxes and customs duties,
in accordance with the
conditions and procedures
indicated.
Property Free Zone Inland Investment Investment Zones Technological Zones
Customs/
Machinery
and spare
parts
Zone, excluding operating
costs in that Zone.
All projects investing under
the Free Zones Regime shall
be subject to customs and
tax control in accordance
with the rules defined
by a decision issued by
the Authority’s Board of
Directors, in collaboration
with the Egyptian Customs
Administration and Tax
Authority.
Subject to the provisions
provided for under the laws
and regulations concerning
the prohibition of dealing
in certain commodities or
materials, the commodities
exported abroad by Free
Zone projects or imported
for the purposes of pursuing
their activities, shall not
be subject to the rules
governing import and
export, or to the customs
procedures related to the
exports and imports. Such
commodities shall not be
Property Free Zone Inland Investment Investment Zones Technological Zones
Customs/
Machinery
and spare
parts
subject to customs duties,
the value-added tax, or
other taxes and duties.
The Authority may allow
the temporary ingress of
local and foreign goods,
materials, parts, and raw
materials, from inside the
country to the Free Zone,
on a temporary basis, to
repair them or to carry out
manufacturing processes
on them, provided that they
are later returned into the
country. Customs duties
shall be collected for the
repair costs in accordance
with the provisions of the
Customs Laws.
With the exception of
passenger vehicles, all tools,
supplies, machinery and
transportation necessary
for exercising the activity
licensed for the projects
existing within the Free
Zone shall be exempt from
customs duties, the VAT, and
other taxes and duties, even
Property Free Zone Inland Investment Investment Zones Technological Zones
Customs/
Machinery
and spare
parts
if the nature and requisite
for pursuing such activity
require their temporary
exit from the Free Zone to
the country and, thereafter.
The aforesaid shall apply
to the tools, supplies, and
machinery, according to
the cases, guarantees,
conditions, and procedures
specified by a decree issued
by the Prime Minister upon
a proposal by the Competent
Minister and the Minister of
Finance.
Foreign
exchange
currency
The capital of the
companies governed by
the provisions of this Law
may be determined in any
convertible currency. Their
financial statements may
be prepared and published
using this currency, provided
that the subscription to their
capital was made in the
same currency.
Their financial statements
may be prepared and
Property Free Zone Inland Investment Investment Zones Technological Zones
Foreign
exchange
currency
published using this
currency, provided that
the subscription to their
capital must be in that same
currency.
The designated capital of
the companies governed by
the provisions of this Law
may also be transferred
from Egyptian pounds into
any convertible currency,
according to the prevailing
exchange rates announced
by the Central Bank at the
date of transfer.
Research &
Development
To help achieve the goals
of comprehensive and
sustainable development,
the Investor may dedicate
a percentage of his annual
profits to create a social
development system,
outside of his investment
Project, by supporting
technical education or the
funding of research, studies,
and awareness campaigns
aimed at production, in
developing and improving
No set requirement To help achieve the goals
of comprehensive and
sustainable development,
the investor may dedicate
a percentage of his annual
profits to create a social
development system,
outside of his Investment
Project, by supporting
technical education or the
funding of research, studies,
and awareness campaigns
aiming at production, in
developing and improving
To help achieve the goals
of comprehensive and
sustainable development,
the investor may dedicate
a percentage of his annual
profits to create a social
development system,
outside of his Investment
Project, by supporting
technical education or the
funding of research, studies,
and awareness campaigns
aiming at production, in
developing and improving
Property Free Zone Inland Investment Investment Zones Technological Zones
Research &
Development
the agreement with any of
the universities or scientific
research institutions, or
training and scientific
research.
The amounts spent by an
Investor on any of the fields
provided for in the previous
paragraph shall not exceed
10% of his annual profits
after excluding the costs
and expenses which are
deductible in accordance
with the Income Tax Law.
the agreement with any of
the universities or scientific
research institutions, or
training and scientific
research.
The amount spent by an
investor on any of the fields
provided for in the previous
paragraph shall not exceed
10% of his annual profits
after excluding the costs
and expenses, which are
deductible in accordance
with the Income Tax Law.
the agreement with any of
the universities or scientific
research institutions;,
or training and scientific
research.
The amount spent by an
investor on any of the fields
provided for in the previous
paragraph shall not exceed
10% of his annual profits
after excluding the costs
and expenses, which are
deductible in accordance
with the Income Tax Law.

Governing Authorities and their Responsibilities 

The current law stipulates that the Supreme Council for Investment will be established under the chairmanship of the President of the Republic to carry out the following :

a) Take all necessary measures to set up a good climate for investment.
b) Develop the general framework for the legislative and administrative reform of the investment environment.
c) Adopt the policies and the investment plans which prioritize target investment projects.
d) Follow up the execution of investment plans and programs by the state’s authorities.
e) Explore the investment opportunities available in each sector and examine the problem areas within them.
f) Monitor the development of Egypt’s ranking in international investment reports and indicators.
g) Follow up on the mechanisms for investment dispute resolution and the status of international arbitration cases.
h) Oversee the joint liability of all ministries, public authorities and government bodies concerned with investment.
i) Resolve any confusion which may raise among authorities in areas of
investment.

Secondly, having established its power to allocated state-owned land within the 2017 law, GAFI is given a number of additional duties. As a public economic authority, it reports to the Competent Minister and works

 

to regulate, encourage, advance, administer and promote investment in the country. One of the ways this is done is by delivering incorporation and post-incorporation services to joint-stock companies, partnerships limited by shares, and limited liability companies – including the automation and unification of their procedures. Moreover, GAFI is responsible for carrying out these procedures swiftly, and will often decide on the application for incorporation within one full business day from the date of submission, as well as ensuring the following services are provided to companies:

a) Simplified procedures related to the general assemblies and boards of directors of new companies.
b) Digitized books and documents to stay in line with technological advancements.
c) Developed, standardizes and simplified procedures for capital increase or decrease.
On a more general scale, GAFI is also to:
a) Draft an investment plan (in cooperation with all the state’s competent authorities).
b) Develop plans, studies, and regulations that would attract and encourage national and foreign investment in various fields, pursuant to the national investment plan.
c) Create a database and map for the available investment opportunities and the target investment projects and activities.
d) Issue certificates needed by investors to enjoy the incentives and safeguards granted by this law.
e) Develop an investment promotion plan and take all necessary measures to publish the plan both locally and abroad.

f) Standardize all official forms related to investment affairs, in coordination with the competent authorities, and offer these forms online and through other channels.
g) Develop a management system for free and investment zones.
h) Explore and provide suggestions for existing legislation.
i) Hold conferences, seminars, workshops and exhibitions connected with investment affairs, both locally and abroad.

The new law also facilitates licensing procedures by offering two new
routes for registration:
1. Applying directly to the Investors Service Center at GAFI or
2. Using one of the private Approval Offices.

Approval Offices are authorized by GAFI to review and confirm the completeness of their applications in order to attain the licenses required to set up, operate or expand a project. Approval Offices are to issue, to issue certificates (valid for two years) confirming that the investor
financially and technically complies with all terms and conditions required by the law and that all their documents have been submitted. The investor is to then submit this certificate to the authorities, which have a maximum of 10 days to accept or refuse the application.

Certificates are then submitted to the competent authorities and their representatives at the Investors Services Center.

Essentially, the new law gives GAFI the authority to function as a one-stopshop for investors to obtain all licenses and approvals they may need to set up and operate a project, including allocating state-owned land.

Since one of the center’s functions is to speed up the licensing process, a time limit of two days has been implemented to give feedback to investors

on their company’s compliance and completeness (but there is no time limit on the issuance of final approval or licenses). The center can also object to the certificate within ten business days. Additionally, the center also has the power to ratify board and shareholder meeting minutes, capital increase and reductions, liquidation, and all other company related matters. It should also be noted that strategic as well as PPP (public-private partnerships) projects in infrastructure, renewable energy, transportation or ports can also be set up with the issuance of a single license from the Cabinet.

Finally, Competent Authorities now have the power to examine the investment application submitted through the Investor Service Center, however objections can only be made within sixty days.

The new law also ensures that GAFI can carry out these duties by prescribing a structured system of management, namely that the Board of Directors must be headed by the Competent Minister, that it must include representatives from relevant authorities and bodies, as well as have members who are experienced in the area of private investment and in the law. The law also includes requirements that the board should meet at least once a month in order to complete its tasks.

With GAFI functioning as a facilitator between the investor and the system of investment, the investor must also provide the right documents and paperwork to initiate the process. Below are the steps necessary to create a Joint-Stock Company, a Partnership Limited by Shares, or a Limited Liability Company:

Documents Required:

Photocopies of the power of attorney from each of the investors or partners
– Photocopies of the national IDs or passports of each of the investors or partners

A bank certificate proving the availability of at least 10% of the project’s capital for joint stock companies and partnerships limited by shares, or 100% for limited liability companies
– A copy of the party’s legal counsel’s Egyptian Bar Association identification card
– Original certificate indicating that the company’s auditor is listed at the registry of accountants and auditors
– Application to GAFI as well as a financial Letter of Indemnity on behalf of GAFI according to the type of activity and its investment costs
– The company’s Articles of Incorporation

Allocation of Property

This new system permits investors to obtain real estate properties required for pursuing or expanding activity, regardless of participation or capital. GAFI is to issue an updated and detailed map specifying all available properties. These properties are then allocated upon the approval of the Council of Ministers and the President of the Republic. Properties allocated can include state private property, so long as the investor indicates in his application the purpose and size of the project.
If more than one investor competes for a certain plot, whether by way of sale, lease, lease-to-own, or license, those who meet the technical and financial requirements will be selected based on a points system.

As for the sale price, rent, or consideration of usufruct of the property, it is to be estimated by either the General Authority of Government Services, the Supreme Committee for Pricing of State-Owned Lands at the Ministry of Agriculture, New Urban Communities Authority, Tourism Development
Authority, or the Industrial Development Authority. The chosen authority, based on the nature of the target activity, will have one of its experienced representatives finalize the estimation within 30 days of receiving an application for estimation.

The law ensures that decisions will not be terminated unless in the following situations:

a) Failure to receive the real estate property within 90 days of receivingapproval.
b) Failure to start the project within 90 days from the date of receiving the property (without a valid excuse).
c) Violation of the conditions governing the payment of the financial dues and the payment dates.
d) Changing the purpose for which the real-estate property was allocated,

pledging the property, or establishing rights on the property without proper written consent from the Administrative Authority.

e) Committing material violation of the terms of the contract or the license for usufruct at any point and then failing to rectify the causes of the breach.

Settlement of Investment Disputes 

Amicable Settlement

The New Investment Law introduces three committees that deal with different types of complaints, as well as a new arbitration and mediation center. The three committees settle disputes between investors and the Authority, the state or any of its branches. Their decisions are binding
on the state and its branches but not on investors. Failure to enforce decisions made by these committees will hold the state departments liable to civil penalties, however, none of these new methods are to prejudice the right of investors to resort to the judicial system for dispute settlement.

In the following page you will find an overview of the various means of dispute settlement available, with a particular focus on the new committees presented by the New Investment Law.

New Settlement Committees

Issue Committee Result
Complaints filed against the resolutions issued in accordance with the law and regarding the issuance of approvals, permits, and licenses The Grievance Committee The committee is to respond within 30 days from the hearing/ submissions closing date
Issues with applications, complaints, or disputes submitted or referred to the state or one of its branches, authorities, or companies Ministerial Committee on Investment Dispute Resolution Competent administrative authority is to submit memoranda relevant to the request and the committee is to settle matters within 30 days
Disputes arising from investment contracts with the state or one of its branches, authorities, or companies Ministerial Committee on Investment Contracts Dispute Resolution The committee is to examine and explore the dispute arising between the parties and then execute the necessary settlement, with the consent of the contracting parties. The settlement is to then be presented to the Council of Ministers and, upon their approval, becomes enforceable and binding on the administrative authorities.

Arbitration

Finally, the new law allows for arbitration either through the traditional method or through the newly created “Egyptian Center for Arbitration and Mediation”, an independent entity based in Cairo. This center is available for investors to settle disputes between them and other investors or the
state. The formation of this new method of arbitration avoids unfair rulings that previously occurred, and ensures that civil liability will only be found if the individual was aware of their crime.
The center is managed by a board of five directors appointed by the Prime Minister every five years. This board is to issue the articles of association for the center as well as its arbitration and mediation rules.

Litigation

Egypt operates under a civil law system of codified laws, largely derived from the French Napoleonic Code. The Egyptian Civil Code of 1948 remains the primary source of legal rules applicable to contracts and is influenced by the French Civil Code and Islamic (Shariah) law. The Civil and Commercial Procedural Code regulates litigation procedures across all court levels since they are the same in all cities. Despite this, court jurisdiction varies from one local court to another according to the nature of the dispute.

There are three tiers to the courts of general jurisdiction, namely:

1. The District Courts (al-Mahākim al-Juz’iyya) and primary courts (alMahākim al-‘Ibtida’iyya or al-Mahākim al-Kuliyya) act as courts of first instance. Their jurisdiction is primarily based on the monetary value being disputed.
2. The Courts of Appeal (Mahākim al-‘Isti’nāf) form the second instance of litigation.
3. The Court of Cassation (Mahkamat al-Naqd), which is solely concerned

with reviewing questions of law, is the highest court in the hierarchy of adjudication.

In the last decade, specialized Economic Courts were created as part of the courts of general jurisdiction to ensure the efficient resolution of disputes in commercial matters. These courts have exclusive jurisdiction over civil disputes arising out of the application of 13 particular laws which include those regulating the capital market, investment, financial leases, unfair competition and anti-trust, companies, transfer of technology, commercial agency, intellectual property, insolvency and the banking system.

To complement this, they were also given exclusive jurisdiction over crimes related to economic activity, including insurance, financial leases, capital markets, investment, intellectual property, telecommunications, unfair competition and antitrust, consumer protection and electronic signature.

Administrative courts also exist within the country, however they form an independent court system, organized under the Council of State (Majlis al-Dawla). Their area of jurisdiction concerns matters related to public and governmental entities. Administrative law mainly consists of case-law
from rulings in the administrative courts.

Court Proceedings in Egypt

Below are the steps generally taken to initiate court proceedings:

Filing the claim statement with the competent court.
2. This statement is subsequently served upon the defendant(s) through a court bailiff.
3. The court bailiff serves a formal notice notifying the defendant of the
claim, and the time and date of the hearing, together with a copy of the
statement of claim.

Costs

The average cost of litigation in the Egyptian cities measured is 23.6% of the claim value, significantly lower than the global average of 35.1% and below the regional average of 24.6%. Additionally, enforcement fees are regulated nationally by the Ministry of Justice as set by the Law on Court Fees, and it is therefore identical across all cities. Egypt’s court fees, at 1.3% of the claim value, are among the lowest in the world. Court fees associated with filing a case are fixed, while the enforcement fees are largely based on a percentage of the claim value.

Enforcement of judgments

Foreign judgments can be enforced in Egypt under the procedural code, however the courts will only examine final judgement. Prior to this however, the following requirements must be fulfilled:

  • The reciprocal treatment of judgments by Egyptian courts. If there is no reciprocity the court will tend to review the merits of the case as if it had original jurisdiction over the dispute
  • Egyptian courts do not have jurisdiction over the dispute, whereas the foreign courts do
  • Correct procedures were followed in the international court proceedings. Egyptian courts will essentially verify that the parties to the dispute were duly notified and properly represented in the proceedings
  • The foreign judgment is final and has res judicata effect
  • The foreign judgment does not conflict with a previous judgment rendered by an Egyptian court in the same dispute, and is not contrary to public order or public morals as understood by Egyptian law