Egypt started, as of 18 September 2020, applying its amended Harmonised Customs Tariffs, in a step intended to encourage the adoption of Electric Vehicles, alongside the already incentivised gas vehicles. By virtue of Presidential Decree no. 549/2020, amending Presidential Decree no. 419/2018, published on 17 September 2020, a customs tariff of 2% of the value (or the applicable input tax, whichever is lesser) will apply to all imported equipment for the setup of electric vehicles (EVs) charging stations and all parts utilised for EVs conversion. This is the same tariff already applicable for natural gas vehicles (NGVs), components for retrofitting, and renewable energy (solar and wind energy) equipment and associated spare parts. No change seems to have been made to the customs exemption of EVs themselves (which remain however subject to value-added tax).
Also amended is the threshold of local component triggering customs reductions. According to the new Presidential Decree, instead of the existing 30% local component threshold, if the percentage of the local component is 10% or more, imported parts will be subject to the input tax applicable to the final fully-finished product after reducing it by certain percentages set out in an annexed schedule with a maximum of 90% (or subject to the individual input tax applicable to the different parts, whichever is lesser, so long as the local component has reached 60%). The local component determination considers the contribution of the assembly line in addition to the ratio of locally manufactured parts to the overall number of parts constituting the finished product, as follows:
|Local manufacturing component||Input tax reduction on the finished product|
|From 10% up to 20%||105% of the percentage of local manufacturing|
|More than 20% up to 30%||110% of the percentage of local manufacturing|
|More than 30% up to 40%||115% of the percentage of local manufacturing|
|More than 40% up to 60%||120% of the percentage of local manufacturing|
|More than 60%||130% of the percentage of local manufacturing, with a maximum of 90% of the input tax applicable to the finished product|
This step has been positively perceived by electric vehicles enthusiasts, but we have a long way to go before we see a thriving EV market in Egypt. According to the latest reliable resources on the matter, only 150 to 200 are currently in use in Egypt. The expansion is mainly hindered by the complexity of the licensing system (which in Egypt is based on fuel capacity, that is not applicable for EVs) and the lack of appropriate coverage by charging infrastructure.
The first challenge is being addressed by the government, which is currently issuing temporary licenses for EVs, until the appropriate regulatory framework has been put in place. As for the infrastructure, with the 112 charging stations set up by Revolta Egypt and Infinity Energy across Egypt as of June 2020 (Enterprise, “Is Egypt ready for electric vehicles?”, 10 June 2020), and additional 678 in the pipeline, the new Decree seems to open the door for more investment in charging stations, and hopefully encourage the wide adoption of EVs in the near future. The Ministry of Electricity and Renewable Energy from its side is working on developing the infrastructure to ensure that the charging stations are connected to the grid and is also working on setting the charging tariff.
The Ministry of Public Enterprises is also reported to have been exploring ways to build EV charging stations, while we understand that the National Authority for Military Production has signed an MOU with a Chinese company to begin local production of charging stations with a plan to build 1,000 stations over the next 3 years.