Egypt’s Supreme Council for Investment (SCI), headed by the President of the Republic, has just announced on 16 May 2023, a new set of incentives for existing and new projects and investments in the country.
- Facilitating investment companies’ incorporation following an amendment to be announced to the Executive Regulations of the Investment Law no. 72/2017, including the authorisation of companies which depend on natural gas as feedstock to operate under the free zones’ status.
- Shortening the timeline for licenses’ issuance to 10 business days, with licenses to be required once at the time of incorporation, and directing the General Authority for Investment and Free Zones (GAFI) to work with all relevant authorities on creating a virtual one-stop-shop to deal with the incorporation, operation, and liquidation of projects, together with amendments to be passed to the E-Signature Law no. 15/2004 to give effect to the foregoing incentives.
- The Ministry of Justice will announce a number of legislative amendments to ease hurdles related to land ownership and acquisition of real estate by foreigners.
- Increasing the scope of the Golden License, without limiting its issuance to national and strategic projects’ implementation, and amending the relevant legislation to allow existing companies to benefit from the Golden License regime.
- Structural changes to the rules governing State-owned companies and entities and removing any favourable treatment they benefit from to ensure the competitive neutrality of the Egyptian market, as well as studying the possibility of changing the affiliation of a number of entities responsible for public utilities to guarantee their independence.
- Forming a special unit within the Cabinet that would be tasked with centralising all data related to State-owned companies, to facilitate the decision-making in respect of their restructuring or IPO, etc, and enhancing governance and transparency.
- Allowing a 10-year grace period for foreign investors to import production supplies in order to ease any hurdles related to the set-up of new projects.
- Preventing the issuance of new regulations imposing financial or procedural hurdles in respect of the set-up or operation of projects governed by the Investment Law or imposing new fees on them without consulting the board of GAFI and obtaining the Cabinet and SCI approvals.
- Controlling the imposition of enhancement charges depending on the specific categories of investments to avoid duplication.
- Allowing the Ministry of Finance to apply a set-off mechanism between charges owed by investors and payments due by government authorities, and expediting value-added tax refund to 45 days.
- Expediting the amendments related to profit repatriation in the holding and affiliated companies’ relevant legislation to avoid double-taxation, in order to incentivise local and foreign investments in Egypt.
- Raising the quantitative thresholds of jurisdiction of the economic courts and expanding their scope to expedite the resolution of commercial disputes, as well as raising the floor for appeals, to guarantee quick final settlements for commercial disputes.
- Setting a 3-month deadline for the payment of any compensation in the case of expropriation, and encouraging negotiations with investors to reach agreements around adequate reparations, to increase trust in the investment climate in Egypt.
- Hiring an international consultant in coordination with the International Finance Corporation (IFC) to set a strategic collaborative policy for investment in Egypt and recommend tools for enhancing Egypt’s position in ease of doing business rankings, to achieve the intended 25% to 30% increase in investments over the coming years.
- Proposing amendments to the Special Economic Zones Law no. 83/2005 to increase the incentives and exemptions applicable in special economic zones.
- Creating a unit affiliated to the Cabinet of Ministers and headed by the chairman of GAFI tasked with policy-making and the introduction of laws and regulations necessary for the improvement of start-up companies’ regime, receiving their complaints, and proposing adequate solutions.
- Passing a set of incentives to encourage particular sectors and projects, such as the agricultural, and industrial sectors, and energy in respect of the production of green hydrogen, in addition to the residential sector concerning real estate developers and investments in new urban communities, as well as the transportation sector concerning export fees and customs duties, and the unification of pricing strategy.
We will continue to watch this space and provide updates as they are made official, as we should expect a number of legislative announcements and operational changes from the different authorities in the coming period to give effect to the above directives from the Cabinet. If you wish to discuss any particular points or our view on expected changes, feel free to reach out to the team.