

CALL US:

EMAIL US:

Investment in Egypt, General and Private Free Zones in Egypt

Free zones in Egypt represent a unique investment model as they are one of the investment systems governed by the provisions of Investment Law No. 72 of 2017 and its Executive Regulations, administered by the General Authority for Investment and Free Zones. These zones allow for the establishment of all investment activities within their boundaries in accordance with the authority's policies, primarily focusing on export-oriented industries, with certain exceptions.
Free zones are part of the Egyptian state territory, within its borders and subject to its administrative authority, operating under special tax, customs, and monetary regulations.
- Permitted Activities in Free Zones (Public and Private):
A free zone that encompasses an entire city is established by law and primarily targets exports outside the country. These zones operate under special tax, customs, and monetary regulations. All investment activities within the free zones are permitted in accordance with the policies set by the General Authority for Investment and Free Zones, with a focus on export-oriented industries. However, the following industries are excluded:
- Alcoholic beverage and industries.
- Weapons, ammunition, explosives, and other industries related to national security.
Law No. 160 of 2023 was issued, amending certain provisions of Investment Law No. 72 of 2017. The amendment permits certain activities previously prohibited in the free zones system to be carried out. Article 34 was amended to include the following:
((With the approval of the Supreme Council of Energy, it is permissible to authorize projects within the free zones system in the fields of oil refining, fertilizer manufacturing, iron and steel production, natural gas processing, and transportation, as well as energy-intensive industries.))
- Exemptions, Guarantees, and Benefits Granted to the Project:
The Egyptian state, represented by the General Authority for Investment and Free Zones, has ensured the success of free zones through an integrated system. This includes offering the best advantages, incentives, exemptions, and guarantees when compared to similar options in the regional area.
- Exemptions:
- Exemption of all capital assets and production requirements necessary for the project's operation (except passenger cars) from any customs duties, value-added tax, or other taxes throughout the duration of the project's activities, even if the nature of the activity necessitates their temporary presence outside the free zone.
- Exemption of the project's exports and imports to and from abroad from any customs duties or taxes, including value-added tax or other taxes or duties in effect within the country.
- The project and its profits are not subject to the tax or customs laws or regulations in effect within the country throughout the duration of the project's activities.
- The project's imports and exports to and from abroad are not subject to any regular customs procedures or import regulations in effect within the country.
- Exemption of the project's imports from the domestic market from value-added tax.
- Exemption of transit goods with a specified destination from paying any fees applicable to incoming and outgoing goods, according to the following conditions:
- Exemption of all capital assets and production requirements necessary for the project's operation (except passenger cars) from any customs duties, value-added tax, or other taxes throughout the duration of the project's activities, even if the nature of the activity necessitates their temporary presence outside the free zone.
A. The project must be located within the customs zone.
B. The final destination must be specified in the bill of lading and the invoice.
- Exemption of all local components in goods produced by free zone projects from customs duties in case of selling to the local market (within the country).
- Guarantees:
- Legal action against projects operating under the free zones system cannot be initiated without consulting the Authority.
- Nationalization or confiscation of projects and establishments is prohibited.
- Administrative measures such as placing projects under guardianship, seizing assets, or imposing restrictions such as appropriation, retention, or freezing of assets cannot be carried out without a court order.
- Benefits:
In addition to the benefits provided by the Investment Law to all projects operating under its purview, one of the key advantages of free zones is that projects deal with a single administrative body, the Free Zones Management, that handles all project-related matters throughout the project's lifespan. This comprehensive system of procedures facilitates and simplifies the various stages of the project through the following:
- Issuing all necessary approvals for the establishment of the project.
- Providing the project with an activity license that serves as the only required permit to interact with all government entities, eliminating the need for registration in the industrial registry.
- Completing the procedures for reserving and delivering land for the project by the zone management immediately upon request (for general free zone projects).
- Approving construction permits by the zone management upon submission and review of engineering drawings (for general free zone projects).
- Implementing all necessary modifications to the project.
- Facilitating the entry and exit of goods to and from the project premises by issuing import and export declarations and completing all customs procedures.
- Assisting with project liquidation if the desire arises to wind down the project.
- Types of Free Zones:
There are two types of free zones: )public free zones and private free zones(. The free zones sector oversees both types.
(1) Public Free Zones:
There are currently 9 general free zones located throughout the country, equipped with the necessary infrastructure and utilities for operations and accommodating projects (roads, electricity, sewage treatment plants, water networks, telephones). These zones also feature comprehensive customs units and port security police units. The selection of free zone locations took into account the presence in major cities with strategic locations, available workforce, supportive facilities, and proximity to sea and airports.
Investment spaces in general free zones are allocated on an annual usage fee per square meter basis, depending on the type of activity the project engages in. There are plans to establish additional general free zones in South Sinai, Alexandria, and Kafr El Sheikh. The existing free zones include the General Free Zone in Alexandria, the General Free Zone in Port Said, the General Free Zone in Ismailia, the Media Free Zone, the General Free Zone in Nasr City, the General Free Zone in Suez, the General Free Zone in Shebin El-Kom, and the General Free Zone in Qaft.
(2) Private Free Zones:
A private free zone is a standalone entity that consists of one independent project or multiple projects with similar activities, when required by their nature. These zones must be located outside the boundaries of general free zones to accommodate the project's economics and its activity type, necessitating its presence at specific locations to benefit from the advantages offered by the site, such as proximity to raw material sources and production requirements, export markets, necessary workforce, integration with nearby projects, or the need for proximity to a specific port or road.
In other words, private free zones differ from general free zones because they are plots of land outside the scope of a general free zone, allocated for a single investment project due to a lack of space in general free zones or the positive economic impact of the location on the project's operations, such as proximity to raw material sources, an export port, or a specific highway for transporting raw materials or exporting products.
Investors usually choose the location for their project they wish to establish as a private free zone, either through ownership transfer or lease arrangements. They also arrange for the delivery of utilities to the site and provide representatives from customs, port security, and the authority to handle procedures for the import and export of goods.
Prepared by/
RPLF Team
Enter your text here...

BOOK AN APPOINTMENT
