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Executive Regulations of the Investment Law Number 72 of 2017 in Egypt

Tarek Jairwdeh

Author: Tarek Jairwdeh
Senior Lawyer.

Guiding Principle
After several months of controversy, the Egyptian Cabinet finally approved on 25th October 2017 the executive regulations of the new Investment Law number 72 of 2017. The new law provides a range of incentives including for example tax breaks and rebates on projects established in underdeveloped areas.

On 1st of June 2017, President Abdel Fattah Al-Sisi ratified the long-delayed Investment Law number 72 of 2017, which aims to facilitate business procedures and accelerate arbitration of business disputes to offer incentives.  The new Investment Law seeks to incentivize investments in underdeveloped areas and labor-intensive sectors by offering tax breaks and rebates, according to Reuters. The new law is part of the country’s efforts to revise its regulations to create a positive investment climate for local and international investors. The Investment Law aims to make business easier and create incentives to attract investors after years of turmoil, as a part of the ongoing efforts aiming at bringing back more Foreign Direct Investments to the country. However, it seems investors are still waiting for more details before rushing back in. Nevertheless, the new law is expected to boost much needed investment by cutting bureaucracy, especially for startups, and by providing more incentives to those looking to pump investments in Egypt.

The government’s issuance of the executive regulations indeed enhances its credibility in front of the business community. At the same time, the financial and business community welcomed the approval of the new law’s executive regulations, stressing that it is a clear message for foreign investors that developing the investment climate tops the government’s priorities in Egypt.

The Egyptian Cabinet declared in a statement that the executive regulations were studied carefully taking into consideration all opinions and observations of associated ministries and authorities.

The activities governed by the investment law, include industry, trade, agriculture, education, health, transportation, river and coastal transport, housing and construction, water, health, tourism, oil, electricity, sports, natural wealth and the ICT sectors. The executive regulations include the rules and conditions for each of these sectors in order to facilitate the business environment and are divided into five sections, governing incentives and guarantees, the investment environment, investor services, and monitoring. They also address the nature of investment and free zones.

Overall, the regulations have set the circumstances that govern both the Egyptian and foreign investors, as well as the incentives given to facilitate the business climate.

The second chapter of the executive regulations of the investment law is the social responsibility for any business, and the commitments for avoiding environmental hazards, and offering job opportunities to the different society segments, as well as developmental projects.

The regulations also show in article 18 the rules required for establishing a ministry-licensed office for issuing credits and the legal documents for establishing a business. The costs of establishing or renewing license of an office is at an average of EGP 10,000 to EGP 20,000.

The executive regulations will for the first time stipulate a specific number of days that the government will have to approve new licenses and clearances, reducing the waiting time for starting new businesses. The regulations include the special conditions of issuing general, special or additional incentives based on the Investment Law, as well as the procedures of obtaining project approvals. The regulations explain also cases of granting residency to foreign investors, the conditions for recruiting foreign employment and exiting measures from projects. Additionally, the regulations explain the procedures of electronic establishment of companies; controls and forms of allocating lands for projects; and the organization of work in investment, free, and technological zones. And the new Investment Law includes more incentives, such as a 50% tax discount on investments made in underdeveloped areas and government support for the cost of connecting utilities to new projects.

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