During its plenary session, the House of Representatives, led by Counselor Dr. Hanafi Jabali, accepted a draft law filed by the government to change some articles of the investment law established by Law No. 72 of 2017 by Law No. 160 of 2023.
By addressing the mechanism for developing the investment map, expanding the scope of companies that may be granted one approval to establish, operate, and manage the project, which helps to establish investment projects, and increasing some of the special incentives granted to investment projects, the draft law aims to improve Egypt's investment climate and encourage foreign direct investment.
The amendments contained in the draft law also include expanding the scope of projects that may be licensed under the free zones system, to include projects operating in the fields of petroleum manufacturing, fertilizer industries, iron and steel, manufacturing, liquefaction and transportation of natural gas, and energy-intensive industries.
The said amendment also includes providing additional investment incentives with special indicators and controls aimed at attracting particular industries and promoting them to specific areas within the country, through the addition of a new article,
Pursuant toArticle No.11 bis, 35% and not exceeding 55% of the value of the tax paid with the tax return in cash on the income generated from carrying out the activity in the investment project or its expansions, as the case may be, providing the Ministry of Finance commits to distributing this incentive within 45 days following the end of the deadline for filing the tax return, otherwise.
A delay consideration computed based on the Central Bank's credit and discount rate announced on 1 January preceding the incentive maturity date, excluding fractions of the month and the Egyptian Pound that is not taxable income.
To get the aforementioned incentive, the article required that the project, or its expansions, as the case may be, rely on its financing until the date of start-up, on foreign exchange from abroad by at least 50% of the project's finances, and that the project, or its expansions, as the case may be, rely on its financing until the date of start-up, on foreign exchange from in order to secure a minimum level of foreign capital input, and that production commences within six years after the date of this Article's implementation.
Since the issuance of the aforementioned law, the Egyptian legislative authority has always sought to catch up with the global investment climate, and this is obviously shown in the updates of most of the relevant laws in order to create an attractive investment environment for the whole world.
Especially since that, the 2015 Law was criticized by the business community for coming up short and failing to achieve its objectives. Since 2016, the government has been trying to reform the investment environment in Egypt through many pillars, including the legislative level, where the government has embarked on an ambitious economic reform program to secure a three-year USD12 billion IMF loan.
The program includes lifting subsidies, raising taxes, loosening capital controls, and for the first time liberalizing foreign exchange market as a key concern for foreign investors.
Other adjustments accompanied the reform program, where the Supreme Investment Council was launched and released different decisions that aim at enhancing the investment environment in Egypt In the same context, the General Authority for Free Zones and Investment (GAFI) is implementing a new online system to ease and facilitate all required procedures within a shorter time. Additionally, procedures for inspecting company premises by the National Authority for Social Insurance (NASI) have been totally abolished, and an electronic connection has been furnished between GAFI and NASI
Finally, the Current/contemporary amendments for the Investment Law was approved to be the cornerstone of the previous reform measures. The law reflects to what extent the Egyptian government and legislative authorities are keen to avoid any misreading of local and foreign investors' needs.
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