Egyptian Senate sets 15%-55% incentives as part of investment law amendments

Sun 13 Nov 2022 | 6:57 p.m.

The plenary session of the Senate led by Abdel Wahab Abdel Razek approved the government’s proposal to determine the minimum monetary incentive for investment, so that it is not less than 15% and the maximum incentive rate does not exceed not 55% for the investment projects to serve as a real incentive for foreign investment under the draft amendments to the investment law.

This follows lengthy discussions on the bill and the request of the government, represented by the Ministry of Finance, to cancel the minimum and defer to the executive regulations of the bill, despite what was included in the Senate Joint Committee report regarding setting a minimum monetary incentive for investment of at least 35% and increasing the maximum percentage The incentive is from (55%) to (60%) for projects to investment serve as a real incentive for foreign investment, which was approved by the government during the discussion in the committee.

For his part, Deputy Finance Minister Ahmed Kajok demanded a return to the maximum investment incentive of 55% for projects and leave the minimum limit for executive regulations or leave it to the Prime Minister’s decision not to. not restrict government, which was argued by Rep. Mohamed Halawa, head of the Senate Industry Committee.

Hany Serry El-Din insisted on setting the minimum and not relying on the regulatory executive, as he asked the government to legislatively control the text, which was supported by Abdel Razek.

He confirmed that the determination of the percentage mentioned in the report came after the government approved it during the discussion of the draft amendments to the investment law in the committee.

The discussions ended with Kajok’s proposal that the percentage should not exceed 15% as a minimum and 55% as a maximum, which was approved by the plenary session and was approved.

The Senate, in its plenary session held today, finally approved a bill modifying certain provisions of the law on investment.

Abdel Razek announced the final approval of the Senate on the bill and said that the General Secretariat should take the necessary measures in accordance with the law.

The amendments included the possibility for the Cabinet, on the proposal of the competent minister, to extend the work of special incentives for other periods, the total of which does not exceed nine years, which means that it is permissible to extend these incentives up to ‘in 2029.

In the text of the article, the General Authority for Investment and Free Zones (GAFI) has been made responsible for issuing the certificate necessary to benefit from the incentives that are proposed to be added to article two.

The second article included the addition to the Investment Law, which decided to grant investment projects in industries and fields determined by the Cabinet, an investment incentive not exceeding 55% of tax value.

The Ministry of Finance undertakes to pay the premium within 45 days of the end of the deadline for filing the tax return, failing which it will be due in return for a delay calculated on the based on the credit and discount rate announced by the Centrale. Bank as of January 1 preceding an incentive’s due date, excluding fractional months and currency. This incentive is not considered taxable income.

The article instructed the Cabinet, on the basis of a joint proposal by the competent minister, the minister in charge of industry and the minister of finance, to take a decision including the industries and regions benefiting from the incentive stipulated in this article, and the periods of the granting of the incentive for each of them not exceeding 10 years, as well as the conditions, rules and categories of granting of the incentive.

The article stipulated to grant the incentive stipulated in this article that the investment project, or its extensions, as the case may be, to finance its financing until the start date, on foreign currencies at a rate of at least 50%, to ensure a minimum flow of foreign capital and to start production within six years from the date of entry into force of this article.

It was taken into account during this period to give an adequate opportunity to the investor to make his investment decision and to carry out the necessary studies, especially since the project targets new industries and is above all technically complex. The article authorizes by decision of the Council of Ministers, on the joint proposal of the competent minister, the minister responsible for industry and the minister of finance, to extend this period for a single time.