After several years marked by economic turbulence and uncertainty, two major political actions earlier this year launched Egypt towards a more optimistic and stable path. The first action is an amendment to the 1997 Investment Law No. 8, the aim of which is to attract new investments into Egypt as well as to ensure fair agreements between foreign and local investors. The law, which still requires the approval of President Abdel Fattah El-Sisi, seeks to boost direct foreign investment. It includes a number of incentives directed at creating an attractive and promising business climate for investors across various fields and industries. These incentives will create more job opportunities, increase production and exporting activities, and allow the country to produce certain goods that have been traditionally imported in the past. Furthermore, the new legislation provides tax exemptions of up to 50 percent for investments in the country’s most vulnerable and underdeveloped regions, in sectors such as electricity and renewable energy. Based on the new law, authorities will have a 60-day deadline to provide investors with all requested authorization. It offers a 2% unified custom tax on imported equipment and machinery. Investors will also be exempt from stamp taxes and fees for documenting the company, according to Article 25 of the law. In addition, Article 20 states that the total amount of foreign employees may amount to 20% of the total work force in their projects, instead of 10% as stated in the previous law. The second action consists of a proposal, as suggested by the head of the Arab Union for Direct Investment Sameh Sedki, that grants Egyptian citizenship to foreign investors who deposit either $3.5 million during a span of five years, or $5 million during a span of three years with no interest. The deposit would eventually be refunded to the foreign investor in Egyptian pounds. Middle Eastern and African investors may be interested in obtaining the Egyptian citizenship as they share a similar language, culture, and due to geographical proximity. European countries have launched similar initiatives to face their economic crises. In the United States, residency permits are offered in exchange for a $500,000 investment in a project that provides jobs for at least 10 people, or $1 million in the applicant’s own business. The ranges of efforts in the new economic zones will improve investment output and eventually lead to an expansion in direct foreign investments. These efforts will lead the country through a very tough economic reform in a stable manner. Although there are still challenges to be tackled, the country’s outlook is brighter than it has been since the 2011 revolution. Egypt is currently well positioned to compete with global investment markets.
The State Council has dispatched the new investment draft law back to the cabinet for reconsideration of its conclusions relating to some of the provisions on the bill. Article 51 of law No. 17 of 2015, states clearly that the General Authority for Investment and Free Zones (GAFI) is the only responsible party to offer available land for investment which includes representatives of the landowners in the process. The State Council added that articles 53 to 67 did not determine the entitled authority to terminate the final contract for real estate investment. The government approved the movement of tax laws, including the recent application of the Value Added Tax (VAT) Law and the Law to End Tax Disputes. In addition to drafting amendments to the Income Tax Law, in order to defer applying the tax on capital gains for three years, after the Supreme Council for Investment approved the deferment decision and added tax incentives to the Investment Law, which were approved by the cabinet. The Presidential Decree No. 89 of 2017 was issued by President Abdel Fattah Al-Sisi to establish the National Council for Payments under his chairmanship. The council will work to decrease the use of banknotes outside the banking sector, support and encourage the use of electronic payments, and develop national payment systems and their supervision frameworks to lessen the risks associated with them.
International law firm Eldib announced today the promotion of three lawyers to its partnership with effect from 1 May 2015…
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