Before you choose a vehicle and sign the incorporation documents in Egypt, read what Investment Law No. 72 of 2017 says about guarantees and incentives. These are written rules, not negotiating promises. The law has been amended, most recently by Law No. 160 of 2023, which added a cash incentive for industrial projects and changed several incentive conditions. This article summarizes the points an investor should check before the decision. Check for later amendments to the Investment Law before relying on this guide. It follows the Arabic text as amended and the English translation published by GAFI, which states that the Arabic original controls if the two differ. Article numbers refer to the law as amended. Related guides are linked at the end of this article.
Principles the law sets for investment
Article 2 states the aims of investment (growth, domestic production, jobs, exports, competitiveness) and the principles that apply to the investor and the State. They include equal investment opportunities regardless of size and location and without discrimination based on gender, support for small and medium enterprises, protection of the environment and public health, freedom of competition and a ban on monopolistic practices, governance and transparency, and stability of investment policy. The last principle is a reservation: the State may maintain national security and the public interest. A reader should keep that sentence in mind when reading the guarantees below.
Written guarantees
Article 3 provides that all investments in Egypt receive fair and equitable treatment, and that the State guarantees the foreign investor the same treatment as the national investor. As an exception, and in application of reciprocity, foreign investors may receive preferential treatment by a decree of the Council of Ministers. Invested assets may not be subject to arbitrary measures or discriminatory decisions. The State grants non-Egyptian investors residence for the term of the project, in accordance with the laws regulating residence and the Executive Regulations. The State honors and enforces the contracts it enters into, and all decisions on investment project affairs must be reasoned.
The same article has a limit that the investor should know. A project set up on the basis of fraud, fraudulent misrepresentation or corruption cannot enjoy the protection, guarantees, privileges or exemptions of the law. The law requires proof by an irrevocable judgment of a competent court or by an arbitral award, so an allegation alone does not remove protection.
No nationalization, and expropriation only with advance compensation
Article 4 says investment projects may not be nationalized. Their assets may be expropriated only for public utility and in return for just compensation, paid in advance without delay. The compensation equals the economic value of the expropriated assets on the day before the expropriation decision, and it is freely transferable. Outside the cases set by law, a project may not be sequestrated through administrative procedures, except under a final court judgment, and its assets may not be seized, confiscated or frozen except under a court order or final judgment. Tax debts and social insurance contributions owed to the State are an exception: they can be collected by all forms of seizure. The article also bars administrative bodies from issuing general regulatory decisions that add financial or procedural burdens on setting up or operating projects, and from imposing or amending service fees, unless the GAFI board has given its opinion and the Council of Ministers and the Supreme Council for Investment have approved.
No license revocation without notice
Under Article 5, an administrative body may not revoke or suspend a project's licenses, or reclaim the real property allocated to it, unless it has served the investor a notice listing the alleged violations, heard the investor's evidence and given an adequate grace period to correct them. GAFI's opinion must be obtained first, and GAFI must give it within seven days of receiving a complete request. The investor may file a grievance against these actions before the committee referred to in Article 83 of the law.
Freedom to fund, transfer, import and export
Article 6 lets the investor set up, launch and expand the project and fund it from abroad in foreign currency without restriction. The investor may own, manage, use and dispose of the project, make profits, transfer the profits abroad, liquidate the project and transfer the liquidation proceeds, in whole or in part, without prejudice to the rights of third parties. The State permits cash transfers in respect of foreign investment to be made freely and promptly into and out of Egypt in a freely convertible currency, and permits conversion of local currency into a freely usable currency without delay. On liquidation, the competent administrative bodies must notify GAFI and the company of its liabilities within 120 days of the liquidator's complete application. If that period passes without notice, the company is deemed discharged from those liabilities, without prejudice to the liability of the official responsible for a false statement or an unexplained delay.
Under Article 7, an investment project may import raw materials, production requirements, machinery, spare parts and means of transport suited to its business, directly or through others, without registering in the Register of Importers. It may export its products without a license and without registering in the Register of Exporters. The right is subject to the laws regulating importation, and the project must send GAFI a quarterly report of the quantities and types imported or exported.
Article 8 allows a project to employ foreign workers up to 10 percent of its workforce, which the Executive Regulations may raise to 20 percent if qualified Egyptians cannot be found. A decree of the Supreme Council for Investment may exempt strategic projects from the percentages on condition that they train Egyptian labor. Foreign workers may transfer their financial entitlements abroad, in whole or in part.
General incentives
Article 9, as amended by Law No. 160 of 2023, gives the general incentives to all investment projects under the law, whether they were set up before or after the law came into force, except projects under the free zone framework. Article 10 exempts company memoranda and the credit facility and pledge contracts linked to the business from stamp duty and from notarization and publicity fees for five years from entry in the Commercial Register. Contracts to register land needed for forming the company get the same exemption. A uniform customs duty of 2 percent applies to imported machinery, equipment and devices required for formation, and the same rate applies to companies working on public utility projects. Industrial projects may also import casts, molds and similar production requirements without customs fees for temporary use, provided they are re-exported.
Special incentives: a discount off taxable profit
Article 11 grants projects set up under the investment map a discount off taxable net profit. For Sector A, the geographic areas most in need of development under the map and the national plan, the discount is 50 percent of the investment cost. For Sector B, which covers the remaining areas, the discount is 30 percent of the investment cost, for the project types the article lists. The list includes labor-intensive projects, small and medium enterprises, projects using or producing new and renewable energy, national and strategic projects and tourism projects listed by decree, electricity generation and distribution projects listed by decree, projects exporting their products outside Egypt, automotive manufacturing and its supplying industries, wood, furniture, printing, packaging and chemical industries, antibiotics, tumor drugs and cosmetics, food, agricultural crops and agricultural waste recycling, and engineering, metallurgical, textile and leather industries. The incentive may never exceed 80 percent of the capital paid up to the date the activity starts, and the discount period may not exceed seven years from the start of activity.
Article 12 sets conditions. The project must be a newly incorporated company or establishment, formed within the period the article sets (as amended in 2023, three years from the Executive Regulations' operation date, extendable by Council of Ministers decisions for additional periods totaling no more than nine years). It must keep regular accounts, with separate accounts for each zone if it works in more than one. And the owners may not contribute or use tangible assets of a company that existed when the law took effect to set up the new project, or liquidate such a company to set it up. A breach cancels the incentives, and the company must pay all taxes due. Expansions of existing projects may also benefit, as the last paragraph of Article 12 provides.
The cash incentive for industrial projects
Article 11 bis, added by Law No. 160 of 2023, grants projects in the industrial activities determined under the article, and their expansions, a cash incentive of 35 to 55 percent of the tax the project pays in its income tax declaration. The Ministry of Finance must pay it within 45 days of the due date for submitting the declaration. To qualify, at least 50 percent of its funds must be financed from abroad in foreign currency until operations begin, and operations must begin within six years of the article's entry into force, extendable by a Council of Ministers decree for up to six more years. The conditions and categories come from decrees and the Executive Regulations, so an investor in an industrial project should confirm the current list before relying on this incentive.
Additional incentives and the GAFI certificate
Article 13, as amended in 2023, lets the Council of Ministers grant additional incentives to projects covered by Articles 11 and 11 bis. They include special customs ports of entry, State payment of all or part of the cost of bringing utilities to the premises, State payment of part of staff technical training costs, a refund of 50 percent of the value of land allocated to industrial projects if production begins within two years of handover, free allocation of land to some strategic activities, and payment of up to 50 percent of utility bills for up to ten years, under rules set by the Supreme Council for Investment. Article 14 authorizes the GAFI chief executive or a delegate to issue a certificate confirming use of the incentives in Articles 10, 11, 11 bis and 13. The certificate is final and self-executing, and all entities must comply with it. Ask for it early, since it is what the tax and customs authorities act on.
One-stop services
Article 21 creates the Investor Service Center at GAFI and its branches. It handles company incorporation, branch establishment, ratification of board and general meeting minutes, capital increases, changes of business activity and liquidation, and it receives applications for approvals, permits, land allocation and licenses. Under Article 20, strategic or national projects and certain public-private partnership projects in fields such as utilities, infrastructure, renewable energy, roads and ports can receive a single approval by decree of the Council of Ministers that covers setting up, operating and managing the project.
What we review before the decision
We choose the vehicle in light of the activity, funding and exit plans, and we check the project against the investment map to find its incentive tier. We confirm the Article 12 conditions, so that structuring steps do not forfeit an incentive, and we review incorporation documents so the exemptions apply from the first day. For industrial projects we check eligibility for the Article 11 bis cash incentive against the current decrees. We provide this service from our Cairo office.
Read also: Egypt Dispute Resolution: Arbitration and Court Challenges | Mergers and Acquisitions in Egypt: Competition Approval | Egypt Investment Law 72 of 2017: Incentives
Frequently asked questions
Is a foreign investor treated like an Egyptian in Egypt?
The law guarantees the foreign investor the same treatment as the national investor (Article 3). Preferential treatment may be granted exceptionally by Council of Ministers decree on the basis of reciprocity.
Can my project be nationalized?
No. Article 4 prohibits nationalization and allows expropriation only for public utility against just compensation paid in advance without delay, freely transferable.
Can I transfer profits abroad?
Yes. Article 6 lets the investor transfer profits and liquidation proceeds abroad, and requires cash transfers for foreign investment to be free and prompt in a freely convertible currency.
Do all investors get the 50 percent or 30 percent discount?
No. It depends on the location sector and project type, on the investment map, and on the Article 12 conditions, and it is capped at 80 percent of paid-up capital and seven years.
Can an authority revoke my license without warning?
Not under Article 5. It must give notice of the violations, hear the investor, allow a grace period and obtain GAFI's opinion first.
Do you help with entering the Egyptian market?
Yes. From our Cairo office, we help clients study their entry and set up their vehicles.