On March 25, 2024, the Prime Minister issued Decree No. 24 of 2024 introducing regulations governing the temporary exit of tools and machinery from the free zone to the country (the "Decree"). The Decree replaces the previous Decree No. 1689 of 2005 (the "Old Decree") with respect to cases, guarantees, conditions, and procedures governing the temporary exit of tools and machinery from the free zone to the country and their return.

The Decree allows the temporary exit of tools, machinery, equipment, and specialized transportation devices from the free zone to outside that free zone in Egypt. This temporary exit can be for various purposes, including, inter alia, use by the project itself or for leasing to other entities. However, the Decree imposes specific regulations to govern this possibility and ensure responsible utilization as follows:

  • Projects operating within the free zone can benefit from temporary exit provisions by obtaining a commitment from the General Authority for Investment and Free Zones ("GAFI"). For media projects in the free zone, which undertake activities subject to the provisions of the Press and Media Regulation Law, a commitment from the Supreme Council for Media Regulation is required. It is worth noting that failure to re-export the temporarily exited items will result in the payment of all applicable customs duties, value-added tax, and other taxes and fees.
  • The temporary exit period is set at six (6) months and may be extended with the approval of the Head of the Customs Authority.
  • If the specified temporary exit period is exceeded, or the tools and machinery are used for purposes other than those stipulated, the general provisions outlined in the Customs Law and its Executive Regulation shall apply.
  • A certificate from GAFI stating the nature of the activity and the necessity of its practice requiring the exit of said items to the country must be provided. Furthermore, the concerned party must commit not to engage in any activity within the country using the temporarily exited items, except the licensed activity within the free zone. This restriction ensures that the items are utilized solely within the approved framework, preventing any unauthorized usage.

External Operations and Equipment Leasing:

If the project operates the tools, machinery, equipment, and specialized transportation devices for the benefit of others outside the free zone, the provisions stipulated in the Value-Added Tax Law and its Executive Regulations shall apply, in addition to all other legal rules prescribed in such cases. In the case of equipment leasing, the general customs rules in force shall apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.