Minister of Finance Mohamed Maait has affirmed the government’s commitment to implementing financial policies that support the localization of industries in Egypt, which play a crucial role in the national economy. He said that the government aims to diversify the growth structure, rely on production and exports, and create hundreds of thousands of job opportunities annually. To achieve this, the government has launched a new path that provides cash benefits and incentives linked to real targets in strategically and globally competitive industrial sectors, focusing on optimizing around 152 investment opportunities based on strong infrastructure.
Maait made these remarks in his speech at the Scientific Association for Tax Legislation conference titled “Financial and Monetary Policies in Supporting National Industry”. He mentioned the launch of the national program for eco-friendly car manufacturing, which involves signing protocols with seven companies that will benefit from incentives, such as reduced customs categories and cash benefits. These measures aim to enhance the budget of the Eco-Friendly Car Industry Fund by EGP 500m, contributing to boosting local car assembly, reducing import costs, and deepening private sector participation. He also said that eight companies are collaborating with the government in the initiative to replace old vehicles with new ones running on natural gas, with gradual expansion into provinces.
He highlighted the state’s commitment to industrial development, starting with simplifying procedures, including expanding the golden licence, through which investors obtain a single approval for establishing and operating projects in several vital sectors. He added that the government is also keen on stimulating exports, disbursing over EGP 50bn to exporting companies since the initiation of the lump-sum export subsidy dues payment with the Export Development Fund in October 2019.
The golden licence is a mechanism for granting investors approval to buy/rent land and operate projects without having to secure prior approval from multiple government bodies.
Maait explained that the state is working to implement presidential directives, taking necessary legal measures to exempt strategic industrial projects from certain taxes for 5 years, with the possibility of recovering a percentage of the land value and investment costs up to 50%, provided that the project is executed within half of the specified period. He said that the Ministry of Finance has introduced a clearance system between investors’ receivables and tax and other governmental debts and that the treasury bears the property tax due on industrial projects for 3 years.
He added that there is an investment incentive ranging from 33% to 55% of the tax due on profits earned from green hydrogen projects and strategic industries. He also said that customs exemptions have been granted for most parts and components of mobile phones and that the customs tax on others has been reduced to no more than 2%, encouraging local manufacturing. He noted that development fees on parts and components and the final product of locally manufactured mobile phones have been eliminated.
Maait further noted that among the supportive incentives for the national industry is dropping unpaid value-added tax on machinery and equipment imported for industrial production upon commencing production. He said that goods or services exported by projects in special economic zones, or those imported by them, are subject to a zero-rate tax. He also said that the Investment Law No. 72 of 2017 has been renewed, including a deduction of a percentage of the investment cost, up to 50% of the taxable base, for projects in “A” and “B” regions, along with special incentives for activities related to information technology and communications.
He emphasized the provisions of the Law on the Development of Medium, Small, and Micro Enterprises, providing tax and non-tax incentives, including simplified tax systems in the form of a fixed tax amount or a very small fixed percentage of revenue depending on circumstances, without the need to keep books and records and without undergoing inspection for at least 5 years.
The Minister said that the customs tariff has been revised to lower the import tax on more than 150 items of production supplies and inputs. This helps achieve the required balance between the tax imposed on fully manufactured goods and intermediate goods and raw materials that are used in their production, protecting national industry and maintaining employment rates.
He explained that despite all internal and external challenges, the state continues to provide EGP 160bn in easy financing for agricultural, industrial, and touristic production activities with an interest rate not exceeding 11% over 5 years. The General Treasury of the State covers EGP 13bn annually, the difference in the interest rate. More than 2454 clients have benefited from these financing facilities, exceeding EGP 88bn so far.
Maait stated that the General Treasury of the State also pays EGP 5bn, the value of the property tax due on industrial projects for 3 years, and EGP 6bn annually to subsidize industrial electricity.
