Therefore, to meet the demands of the regional business community and promote foreign direct investment (FDI), a new investment law was introduced. In these circumstances, the legislative and executive branches of Egypt agreed to take on the task of enacting a new law that would address Egypt’s long-standing economic issues and adhere to modern corporate standards.
In May 2017, Law No. 72 of 2017 (the investment law), was released. This Law aims to establish a business-friendly, transparent, and predictable environment in which new investments are encouraged and current guarantees and incentives are enhanced. In return, the investment law should directly affect Egypt’s FDI attractiveness and significantly contributes to its ranking as one of Africa’s most FDI attractive countries. This law has been amended several times to enhance the environment for FDI.
In this light, the aforementioned legislative modifications that support FDI are examined chronologically in this article.
A Ministerial Decree No. 876 was introduced in March 2023. It permits investors to acquire residency through real estate or bank deposit investments. Furthermore, in May 2023, the investment law’s executive regulations were revised to improve international investors’ access to financial services and to grant them a one-year residency permit that can be extended throughout the term of their investment project.
Then, in July the President ratifies Law No. 160 of 2023 to amend the investment law to broaden the “golden license” program and introduce additional investment incentives. The amendment primarily targets the natural gas, fertilizer, petroleum, and other energy-intensive industries. These investment incentives consist of a lower rate of customs duties along with exemptions from land registration fees and stamp duty. Additionally, the new law prolongs the time frame during which investment projects can be eligible for unique incentives, like preferential tax treatment.
In the same period, the president ratifies Law No. 159 of 2023 to put an end to SOE exemptions from taxes and fees.
In order to further put investors and entrepreneurs at ease, it was time to have an institution to protect intellectual property. In this light, Law No. 163 of 2023, which established the legal foundation for the creation of the Egyptian Agency for Intellectual Property, was ratified by the president in August of that year. When the new organization is up and running, it will register all new patents, approve them, and settle any legal disputes or complaints pertaining to intellectual property rights.
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In December, Decree No. 77 of 2023 gave specific industrial investment projects additional, favorable tax treatment and financial incentives under the Investment Law.
In order to promote FDI in the green hydrogen field, the President signed Law No. 2 of 2024, in January 2024. This is applicable for all initiatives that generate green hydrogen and its byproducts. These projects have to obtain at least 70% of their funding from outside sources (FDI), employ at least 20% local labor, and support local area development, knowledge transfer, and capacity building. Export-related product, equipment, and raw materials are free from value-added tax (VAT). A golden license will be awarded to projects that are authorized, and the bill also includes other incentives like property tax and certain levies.
In order to promote FDI to possess land in the Egyptian desert, Law No. 11 for 2024 was approved in February, revising the Desert Lands Law. It eliminated prior investment restrictions that prohibited foreign investors from possessing land in the Sinai Peninsula. Furthermore, the president could also consider Arab investors as legal Egyptians for the purposes of land ownership, contingent on cabinet approval.
The impact of these numerous legal reforms, highly rely on their implementation. If these modifications are successfully implemented, international investors should feel more confident and secure in investing in Egypt. Since this gest was essential to bolster the business environment, draw in capital, and foster expansion, a clear increase in FDI should be observed.
BY Egli HAXHIRAJ, Anamaria MESHKURTI, Jonida GJUZI and Noor ALI.
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