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Regulation of Project Expansions under the Investment Law

Highlights: 

Cabinet Decree no. 6 of 2020 (the "Decree") was recently issued to further encourage investments that fall under the Investment Law no. 72 of 2017 (the "Investment law")

 Scope of the Decree:

The Decree clarifies the regulatory framework under which expansions to existing investment projects under the Investment Law are entitled to receive the special incentives stipulated under articles 11 and 13 of the Investment Law. Such incentives cover 30% to 80% of the investment costs through tax breaks, depending on the nature and location of the investment project. Additionally, article 13 stipulates that more incentives can be issued by virtue of a cabinet decree ranging from the state covering a portion of the utility delivery costs (water, electricity, etc.) to allocating the land for the project without consideration.

Eligibility:

The Decree states that in order to be eligible to receive the incentives, the expansion must meet the following conditions:

 1. It must fall under the activities stipulated by the Investment Law’s executive regulations;

 2. It must occur after the issuance of the Investment Law;

 3. It must include adding new assets that  increase the production capacity of the project, bearing in mind that such an assessment will be carried out by a committee from the General Authority for Investments ("GAFI");

 4. The expansion must have independent financial statements; and 

 5. The incentives can only be triggered after the expansion increases the production capacity.

GAFI will also issue technical guidelines and standards to ascertain that the aforementioned conditions are met. 

Application process:

The Decree stipulates that GAFI is the sole authority empowered to issue the certificates for project expansions to benefit from the incentives. The applicant must submit a written application with the necessary documents as determined by GAFI.

The Decree sheds some clarity on the Investment Law and allows GAFI to act assertively to further encourage investments in Egypt.

Our Associate Youssef Sallam welcomes your questions.