On January 6, 2021, new amendments to the Executive Regulations of the Special Economic Zones Law No. 1625 of 2002 (the “New Amendments”) were published attempting to galvanize new investments into special economic zones through a host of new incentives granted to investors.
The New Amendments have stipulated several incentives to particular industries in special economic zones (“SEZ”) upon a decree from the cabinet of ministers. Such incentives include:
The cabinet may also grant one unified approval if the project is deemed as aiding the development of the SEZ or if the project concerns the development of public facilities, infrastructure, energy capacity, roads or ports.
The cabinet may also decide to grant more than one of the aforementioned incentives to a single project.
The New Amendments include restrictions on the application of incentives, among which is that the incentives may not be combined with the incentives listed in the new investment law and that their term is limited to three years, renewable only once.
Under the New Amendments, goods exported from inland to the SEZ are treated as exported goods and are subject to 0% VAT. This is positive for both exporters in land and importer in the SEZ.
The New Amendments also grant the board of directors of the SEZ a broader range of authorities to operate the SEZ without the assistance of other authorities such as the General Authority for Investments. Additionally, the board is empowered to allocate plots for a maximum of 50 years in consideration of an annual usufruct amount.
When seen alongside other legal reforms aiming to improve the investment climate in Egypt, the New Amendments are an important step forward in making Egypt a destination for manufacturing complex goods.
