Egypt: Note On The New Egyptian Investment Law

Last Updated: 6 December 2017
Article by Youssry Saleh & Partners

The long-waited New Egyptian Investment Law No. 72 of the year 2017 was finally passed by the Parliament and issued by the President, this law is expected to attract the investors for the incentives, guarantees, facilitations and advantages provided for in it.

The main characteristics of this law are shortening the time limits, facilitating the procedures on the investors, computerizing the data of investment projects and replacing paper records by electronic ones, which are good steps for a better investment environment.

The New Investment Law includes, interalia, the following advantages: foreign investor is provided a residence during the term of his/her project, he/she is entitled to finance the project and transfer the profits abroad without any restrictions, GAFI must respond to the incorporation requests submitted by the investor within one working day as a maximum, the corporate acquires the artificial personality immediately after being registered in the Commercial Register,.....etc.

The following are the main points stipulated in the New Investment Law.



The foreign investor shall enjoy a treatment equivalent to that of the national, moreover, the Prime Minister is entitled to provide a preferential treatment to the foreign investor. Non-Egyptian investors are provided residence during the term of their projects.

(Article 3)

Nationalization of investment projects is impermissible. The investors' properties may not be expropriated except for the public interest and for an equitable compensation paid in advance and equivalent to the economic value of the expropriated properties. In addition, the investors' properties may not be administratively sequestrated, confiscated, frozen or seized except by a court order or a final judicial ruling with the exception of due taxes and social insurance contributions.

Administrative authorities cannot issue regulations imposing more financial or procedural encumbrances regarding the construction or operation of the ventures governed by this law, imposing or amending the fees or returns of services except after asking for the opinion of the GAFI's board in addition to the approval of the Cabinet and Supreme Council of investment.

(Article 4)

The investor is entitled to establish, widen and finance his/her project without any restrictions, he/she is also entitled to own, manage, use, gain the profits and transfer it abroad, liquidate the venture and transfer the outcome of such liquidation abroad.

The investor is entitled to establish, widen and finance his/her project without any restrictions, he/she is also entitled to own, manage, use, gain the profits and transfer it abroad, liquidate the venture and transfer the results of such liquidation abroad.

(Article 6)

Hiring Foreign Employees

Investment projects are entitled to hire foreign employees with a percentage of 10% of the total employees of the project, this percentage may increase to 20% in case of inability to employ qualified national employees. Such foreign employees are entitled to transfer all or part of their financial dues abroad.

(Article 8)


1. General Incentives

Incorporation contracts, credit facilities contracts and mortgage agreements concluded by the corporates governed by this law are exempted from the stamp tax and the fees of notarization and registration for 5 years from the date of registration of such corporates in the Commercial Register. Moreover, the registration of the title of the land required for the corporates' activities is exempted from the associated notarization and registration fees.

Corporates governed by this law shall pay a 2 % unified custom tax of the value of all machinery, equipment and devices required to establish the project, such rate is also applicable on corporates working in public utility projects when importing the machinery, equipment and devices required for their establishment or continuance.

Investment projects of industrial nature are entitled to import molds and matrices for the temporary usage in manufacturing their products without being charged by any custom duties.

(Article 10)

2. Special Incentives

New investment projects are provided an incentive as a deduction from the taxable net profits, which is:

First: 50 % Deduction from the Investment Costs for Sector (A)

Sector A includes regions of the highest need of development, identified by the investment map, in addition to, the data and statistics issued by the State's Central Agency for Public Mobilization and Statistics (CAPMAS), which will be announced in the Executive Regulations of this law.

Second: 30 % Deduction from the Investment Costs for Sector (B)

For the rest of the state's regions regarding the following ventures:

  • Ventures of high employment rate according to the conditions stipulated in the executive regulation of this law,
  • Moderate and small-sized enterprises,
  • Ventures depending on or producing new or renewable energy,
  • National and strategic projects as specified by the decree of the Supreme Council,
  • Touristic projects as specified by the decree of the Supreme Council,
  • Projects of production and transmission of electricity specified by the Prime Minister's decree,
  • Projects exporting their products abroad,
  • Car manufacture and its supplementary processes,
  • Industries of wood, furniture, printing, packaging and chemical industries,
  • Industry of antibiotics, oncology drugs and cosmetics,
  • Food, agricultural yields and recycling agricultural residues projects,
  • Engineering, metallic, textile and leather industries.

The foregoing tax incentives shall not in any case exceed 80% of the paid-in capital of the company. However, it is not applied for more than 7 years from the date of commencement of the activity of the project.

(Article 11)

3. Additional Incentives

Upon a Cabinet's decree, investment projects stipulated in Article 11 may be provided the following incentives:

  • Allowing the project to establish private custom ports for its own imports and exports,
  • The state may, after the commencement of the project, refund the investor with all or part of the expenses borne by him to extend the infrastructure facilities to the project,
  • The state may partially finance the costs of the employee's technical training,
  • Refunding half the value of the land designated to industrial projects, in case of commencement of the production within 2 years from the date of handing over such land,
  • Allocating free lands for strategic industries.

(Article 13)

Investor's Social Responsibility

The investor may allocate certain percentage of his/her profits to contribute to the social development through carrying out one or more of the following:

  • Taking precautionary measures to save and improve the environment,
  • Providing services or programs in the fields of medical, social, or cultural care or any other fields of development,
  • Supporting technical education or financing the researches, studies or the awareness campaigns seeking to develop the production upon agreement with a scientific university or research institution,
  • Training and scientific research.
  • What is paid by the investor in the previous fields to a limit not exceeding 10 % of his/her net profits is considered as deductible business expenses.

(Article 15)

The One-Approval Businesses

Upon the Cabinet's Decree, corporates established to carry out national or strategic projects contributing to the development process or "Public-Private Partnerships" (PPPs) in specific fields may be provided one approval, such approval is sufficient to establish, run and manage the project, it is self-enforceable without requiring any other procedures.

(Article 20)

Investor's Services center

An administrative unit named (Investors' Services Center) is established in GAFI and its branches to facilitate investment procedures. The center provides the services of corporates' incorporation, establishing their branches, certifying the minutes of the BODs and the general assemblies, increasing the capital, changing business activities, liquidation works and other matters related to corporates.

The center receives the investors' requests regarding the issuance of approvals, permissions, allocation of lands, licenses required to establish and manage investment branches and decides on them according to the applicable laws and regulations.

(Article 21)

Authentication Offices

The investor or his agent can request from Authentication offices approved by GAFI to analyze the documents related to acquiring the approvals, permissions and licenses required to establish, operate and widen the investment project to decide on whether they satisfy the technical and financial conditions in addition to other procedures provided for in the law.

The Authentication Offices shall issue- under their liability –an authenticated certificate valid for one year. Such certificate states to what extent the venture satisfies (totally or partially) the conditions of its establishment according to the applicable laws and regulations.

The competent authority, its representative in the Investors' Services Center and other administrative authorities shall approve such certificate.

(Article 22)

Investment Zones

Upon the Prime Minister's Decree, Specialized Investment Zones may be established in various investment fields including logistic, agricultural and industrial zones. The decree thereof shall determine the zone's location, coordinates, nature of the activities carried out in it, time needed to carry out the procedures required to establish the zone and other general conditions related to carrying out such activities.

The Board of the Investment zones may authorize private sector companies to develop, administer and promote such zones to attract investments to them.

The chairman of the Investment zone is competent to license the ventures to carry out their activities within the boundaries of the zone. Such license is sufficient when dealing with different administrative authorities to get the services, facilities, benefits and exemptions for the venture without the need of being registered in the industrial register, unless required otherwise by the investor.

(Articles 28, 29 and 31)

Technological Zones

The Board of the GAFI, upon the request of the Minister of Communications and Information Technology, may authorize the establishment of the Technological Zones in the fields of communications and IT, to manufacture and develop electronics, databases, programs, technological education and other activities related to or complementing the aforementioned.

All the equipment, machinery and devices, required to carry out the approved activity inside the technological areas, are exempted from any custom taxes or fees. The projects thereof enjoy the incentive stipulated in Article 11.

(Article 32)

Projects of the Free Zones

It is impermissible to authorize the establishment of the following in the free zones : petroleum industries, fertilizers industries, iron and steel industries, industrialize, liquidize and supply of natural gas, high-energy use industries, alcoholic industries, the industry of weapons, ammunition, explosives and other industries related to public security.

Commodities imported or exported by projects of the free zones, to carry out their activities, are not governed by the rules of importation or exportation or the custom procedures of imports and exports or the custom taxes. Except cars, all the equipment, machinery and means of transportation necessary to the activities of the projects in the free zones are exempted from custom taxes, benefit tax and any other taxes or fees.

Projects in the free zones and their profits are not governed by the provisions of statutes related to taxes and fees applicable in Egypt, alternatively, such projects are treated as follows:

Projects in Public Free Zones

  • Pay a fee of 2 % of the value of commodities upon entering (CIF) regarding warehousing projects, a fee of 1% of the value of commodities upon exiting (FOB) regarding manufacturing and aggregation projects. Entrepot trade (transit) of designated destination projects are exempted from the fee thereof.
  • Projects whose principal activity does not imply entering or exiting commodities shall only pay a fee of 1% of the gross income achieved.

Projects in Private Free Zones

  • Pay a fee of 1% of the gross income achieved regarding industrial and aggregation projects when exporting goods abroad, a fee of 2 % of the gross income of the projects when those goods enter the state, Entrepot trade (transit) of designated destination projects are exempted from the fee thereof.
  • Pay a fee of 2 % of the gross income achieved regarding any projects other than stated in the previous paragraph.

Shipping projects established in the free zones are exempted from the conditions regarding the nationality of the ship and the workers on its board, ships owned by those projects are exempted from the application of the provisions of the Law No.12 of the year 1964 regarding the establishment of General Egyptian Institution for Shipping.

(Articles 34, 39, 41 and 42)

Establishment of a New Electronic System

A new electronic system will be introduced by GAFI. Other related public authorities will be required to adapt the new electronic system. Under this system, the competent authorities shall consider the electronic signature, documents and forms that are electronically prepared and approve electronic payments.

(Articles 50)

Specification of the Company's Capital in any Transferable Currency

The capital of the company may be specified in any convertible currency provided that the subscription in such capital is conducted in the same currency. Moreover, the capital of the companies governed by this law may be converted from Egyptian pounds to any other convertible currency according to the exchange rate stated by the central bank at the time of the conversion thereof.

(Article 52)

Allocation of State's Real Estates

The investor is entitled to get the real estates required to carry out or widen his/her activity. Disposition of real estates has different forms, which are: sale, lease-to-own, lease or usufruct. Allocation of state's real estates for the purpose of investment is not governed by the Tenders & Auctions Law No. 89 of the year 1998. Administrative bodies of jurisdiction over the real estates may participate in the investment projects with those real estates as in-kind share or in partnership.

  • Free Allocation of State's Real Estates

Only for the sake of development and in the areas designated by the Presidential Decree, certain state real estates may be freely allocated to investors to establish projects to contribute to the development of those areas. In case of free allocation of real estates, the investor must submit a cash guarantee, or its equivalent, to the disposing entity of no more than 5 % of the value of the project investment costs. Such guarantee shall be recovered after the lapse of three years, starting from the actual production of the projects of productive nature, or from commencing the activity, in case of other projects, providing that the investor shall comply with the disposition conditions.

(Articles 55, 58 and 60)

Settlement of Investor-State Disputes

1. The Complaint Committee

A complaint committee or more is established in GAFI to adjudicate the complaints on administrative decisions issued by GAFI or other authorities competent to provide the approvals, permissions and licenses. The committee adjudicate the complaints thereof with a caused decision within 30 days from the date of finalizing the hearings. Such decision is final and binding to the competent administrative authorities, without prejudice to the investor's right to litigate.

(Article 83

2. The Ministerial Committee for Resolution of Investment Disputes

A Ministerial Committee shall be established to consider the requests, complaints and disputes arising out between the investors on one hand and the state or one of its affiliated entities on the other hand. Such committee shall issue a caused decision within 30 days from the date of finalizing the hearings. The decision thereof shall be-upon the cabinet approval- binding and enforceable and having the power of the executive bond, without prejudice to the investor's right of litigation.

(Article 85)

3. The Ministerial Committee For Settlement of Investment Contract Disputes

A Ministerial Committee shall be established in the Cabinet to settle the disputes arising out of investment agreements in which the state or one of its affiliated entities, authorities or companies is part of. In carrying out its duty and upon the agreement of the contracting parties, the committee is entitled to reschedule the financial dues, rectify the inaccurate pre-contractual procedures and to extend limitation periods stipulated in the agreements thereof. Such settlement- after being approved by the Cabinet – is binding and enforceable to all administrative authorities and having the power of the executive bond.

(Article 88)

4. Arbitration and Mediation Institution

Investment disputes arising as a result of the implementation of this law may be settled by the means agreed upon with the investor or according to Law of Arbitration in Civil and Commercial Matters No. 27 of the year 1994. An institution for arbitration and mediation named the Egyptian Center for Arbitration and Mediation shall be established to settle investment disputes arising between the investors or between the investors and the state or its affiliates, if they agreed- at any phase-to bring their dispute before this center.

(Article 91)

Shielding Senior Executives from Criminal Prosecuting

In cases where a legal violation is committed in the name and on behalf of a private artificial person, its senior executive shall not be criminally prosecuted unless it is proved that he had knowledge of the crime and that he intended to carry it out for his own benefit or the benefit of others.

In the case where the natural person is not held accountable as defined in the previous clause, the legal person shall be liable to a fine not less than 4 times the fine legally prescribed for the crime and not exceeding 10 times the value thereof. In case of recurrence, the license may be suspended or the legal person may be dissolved as the case may be.

(Article 92)

The New Investment Law No. 72 of the year 2017 remains to be seen during its implementation phase.

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.

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