Amendment to Investment Law introduced

15 August 2023 - On 25 July 2023, a significant development emerged from the Egyptian Cabinet with the introduction of Law No. 160 of 2023. This law ushers in noteworthy changes to Investment Law No. 72, presenting fresh incentives and more flexible criteria for both new and existing investment projects. These amendments came into effect on 26 July 2023. 

This legislative action builds upon recent revisions to the executive regulations linked to Investment Law, representing strategic moves by the Egyptian government to fortify the investment climate within the nation. These efforts aim to instill investor confidence in the Egyptian economy, foster sustainable development, and attract greater domestic and foreign investments.

Key highlights of the amendments

• Unified licensing: New and existing investment entities, regardless of their legal structures, can now secure an encompassing single license via GAFI (General Authority for Investment and Free Zones). This streamlined license empowers these entities to establish, operate, and manage investment projects with greater ease, encompassing building licenses and property allocations. This license can also yield one or more investment incentives.
• Incentives for pre-2017 investments: Investment projects incorporated prior to June 2017 are now eligible for the general incentives offered under Egypt's Investment Law. These incentives span exemption from stamp duties, relief from land registration fees, and a reduced custom duty rate.
• Special incentives for post-2020 investments: Investments instituted after the year 2020 and extending through subsequent years up to 2029 (extensions pending Cabinet decrees), are now entitled to special incentives provided by Egypt's Investment Law. These incentives incorporate capped discounts on investment costs.
• Expansion of eligible projects: Projects encompassing oil and natural gas processing, energy-intensive industries, and the production of fertilizers, iron, and steel are now capable of establishment within Egypt's Free Zones. However, the prerequisite is approval from the Supreme Council of Energy.
• Import and duty exemptions: The importation of materials, waste, and scraps generated by projects operating within the Free Zones for safe disposal or recycling within Egypt will no longer be subject to import duties or related customs fees.
• Additional cabinet-granted incentives: Supplementary incentives can be extended to investment projects via Cabinet decrees. These entail exemptions from land usage fees for a decade, a maximum 50% exemption from project contribution to infrastructure costs, and a cost-sharing arrangement where the Egyptian treasury covers 50% of utility expenses for up to ten years.
• Tax incentives: Industrial investment projects funded by at least 50% foreign sources, commencing operations between 2023 and 2029, are granted a tax cash investment incentive of 35% to 55% of their income tax dues, based on filed income tax returns. Importantly, ministries may extend the eligibility window for the incentive beyond 2029 by a maximum of six years.

This legal progression marks an important step towards a more conducive investment landscape in Egypt, aligning with the nation’s broader goals of economic progress and development. By introducing measures that promote ease of doing business and incentivize both local and foreign investments, Egypt is positioning itself to attract a diverse range of industries and drive sustainable growth.