It promises improved procedures, new guarantees, new incentives and structured schemes.  Will it deliver?


[What’s new in Egypt’s New Investment Law]

After lengthy discussions, unnecessarily heated disagreements and to-and-fro amendments spanning several months, Egypt’s new Investment Law 72/2017 (the “New Investment Law”) has been finally passed by Parliament and approved by the President.

Please see above a 10-minutes video prepared by Sharkawy & Sarhan explaining what’s new in the New Investment Law.  Scroll below for a transcript of the points covered in the video.

What’s new in the law?

  • New guarantees are introduced to foreign investors.
  • Extra incentives are granted for investors who set up in certain areas and in certain sectors. As part of these, limited tax deductions have been introduced.
  • The New Investment Law also refined the available investment schemes to make them more transparent and more structured. Although they really are not substantially different from investment areas or methods previously available.  Procedures for setting up investment companies have been improved to make the investment procedures more straightforward and to tackle bureaucracy.
  • A new dispute settlement forum has been established.

New Guarantees:

  • The New Investment Law introduces a new guarantee to investors of equal treatment with nationals. In all events, equal treatment has been a staple clause in most or all bilateral investment treaties concluded between Egypt and most countries.  Now in the New Investment Law, it became a claimable right in court.
  • Preferential treatment may now be granted to foreign investors upon a Council of Ministers decision taking to consideration the requirement of the economic situation.
  • Foreign investors are guaranteed residence during the term of the project. This is not entirely new, since GAFI had set in place guidelines on awarding residence permits to some categories of investors or more likely their representatives in certain cases.  However, these rules were not always public and were subject to change of direction.  It is an improvement to have this guarantee reflected in the law itself.  However, we expect that this will still be subject to the dreaded security clearance.
  • Investors are guaranteed the right to transfer their profits abroad. This is not entirely new; it was introduced as an investment guarantee in 2015.  While in essence, that’s a favorable and most welcome guarantee; however, on its own, it is not enough.  Prior to this guarantee, there were no legal restrictions on transferring FX dues abroad.  The only obstacle was and still remains to be the availability of currency.  The Executive Regulation and further regulation in liaison with the Central Bank of Egypt and possibly the Ministry of Finance will need to put clear and transparent rules, making sure this guarantee will be effective.
  • Typically, any investor has the right to recruit 10% of foreign employees in their projects. In investment companies, this percentage may be now increased to 20%.  In strategic protects, the regulator may authorize higher percentages of foreign labour.
  • The New Investment Law also guarantees that foreign employees in investment companies will have the right to transfer their financial dues abroad. Again, the problem will be currency availability.

New Incentives:

The New Investment Law provides three kinds of incentives: general incentives, specific incentives, and additional incentives.

1. General Incentives:

  • General incentives were regulated in previous legislations.  All investment companies automatically receive the general incentives.  These are a 2% unified customs tax on imported equipment and machinery for the investment projects.  In addition, investors will enjoy stamp tax and registration fees exemptions on articles of association, mortgages and loan agreements.  (Please bear in mind though that, as before, this exemption will be only for 5 years from registration in the commercial registry.)  Exemption from stamp duty tax and registration fees will also apply on any land contract notarization related to the investment entity.

2. Specific Incentives:

  • Specific incentives are a new addition in the New Investment Law. They are temporary incentives; meaning that they will only be available for three years from the issuance of the Executive Regulation.
  • The New Investment Law provides tax deductions to cover a portion of investment costs of the project depending on the zone in which the project is established and the activity. The deductions will be deduced from future profits.  It is expected that the Executive Regulation will regulate this.
  • The New Investment Law divides the country into two zones, which will be defined in the Executive Regulation: (Zone A), which likely will include Upper Egypt and Suez and other areas, and (Zone B), which will be the rest of Egypt.
  • However, not all activities within these zones will receive the specific incentives.  Several decisions to be issued by the Prime Minister in conjunction with other ministers will define which activity is required in which zone and sub-zone.  Investors will get the incentive if they invest in the required activity within a specific sub-zone.
  • The prioritized activities identified in the New Law for Zone B are:Projects, which its production is exported outside Egypt, tourism projects upon a PM decision, national and strategic projects upon a PM decision, labor-intensive projects, small and medium enterprises (Smes), electricity production and distribution projects, renewable energy, automotive assembly, wood and furniture, printing and  packaging industries, manufacture of antibiotics, oncology pharmaceutical and cosmetic industries, food industries and agricultural crops and engineering, metallurgical, textile and leather industries.
  • Investment projects in Zone A will benefit from an income tax deduction to be deducted from the project profit of 50%, with a maximum of 80% of paid capital. Zone B projects will benefit from a deduction of 30% of the investment cost.  The tax incentive is capped at a maximum of 80% of paid capital and over a period of a maximum of seven years.

3. Additional Incentives:

  • The New Investment Law provides an option to projects located in Zone A and Zone B of receiving additional incentives. These incentives will be defined by the Prime Minister, and awarded on a case-by case basis by the Head of GAFI.  They are not entirely new and were introduced in 2015.  Additional incentives include private ports, subsidized utilities, refund of land price and other incentives.  The Executive Regulation will determine the rules and conditions of the additional incentives.

New Scheme:

1. Internal Investment Scheme:

  • Investment Map:  The first addition is the Investment Map to be prepared by GAFI to determine zones and required investment projects as well as government owned land available for investors.
  • Unified Approval:  Big-ticket investors who establish strategic and national projects relating to public utilities and infrastructure, new or renewable energy, roads, and ports don’t have to stand in line with other applicants and may receive a blanket approval or a Golden License from the Cabinet of Ministers.  The Golden License will encompass all required establishment and operating licenses, including building permits and land allocation.  The license may also grant any of the special or additional incentives mentioned in the New Investment Law.
  • Investors’ Services Center:  This is an old idea, which has been attempted – without much success – in previous legislation.  The Investors’ Services Center is advocated as a solution to investors having to deal with various authorities and administrative organs to set up a single project; a system resulting in frustration and often failure.  In this vision, investors obtain all their licenses from GAFI and will not need to deal with any other authority.  While this is a welcome tool, much depends on whether the government will be able to introduce mechanisms to coordinate between the dispersed authorities and procedures.  The effectiveness of this tool requires much more action other than this text of law.
  • Accreditation Offices: These will be licensed private sector service providers who will assist and represent the investor vis-a-vis the authorities in relation to the application process relating to activity licenses and permits and not to the company incorporation.  They are licensed and accredited by GAFI to examine the documents required from investors to obtain approvals, permits and licenses.  The accreditation office will issue an accreditation certificate to guarantee the fulfillment of the investment project’s requirements.  This license will be valid in front of all administrative authorities, subject to the New Investment Law.

2. Investment Zones:

  • The third investment scheme is investment zones. These are specific geographical areas established by a Prime Minister allocated for carrying out specific activities, whose infrastructure is set up and developed by a licensed “Developer”.
  • These investment zones are not entirely new. They have been around since 2007 by Law no. 19/2007.  Examples of existing investment zones are the technological zone in Maadi and the investment area in Cairo Airport.
  • Much of the procedural aspect of investment zones introduced in 2007 is intact in the New Law. They have not been modified much.  However, in policy announcements, the government relies on them in its strategy as the main vehicle for shuffling the investment scene

3. Corporate Procedures:

  • New E-Incorporation system.  GAFI & all other authorities will have to adjust their situation to activate the electronic system during 90 days from the date of issuance the New Investment Law.
  • Per the New Investment Law, the authorities are under a duty to respond to the application for incorporation of an investment vehicle within a maximum of one business day from application.
  • An investor will have a consolidated number for his entity. During the licensing process and throughout operations, all the different authorities will deal with the investor using this consolidated number.
  • The New Investment Law states that post incorporation procedures will also benefit from the electronic system such as general assemblies’ ratification, capital increase and decrease, and use of electronic ledgers.

4. New Dispute Settlement Forum:

  • The law introduces a new arbitration center to settle conflicts that may rise between the investor and state agencies.
  • A new decree by the competent minister will establish the new forum and its procedures.
  • Investors would have to agree to refer to this new arbitration forum in their investment contracts with the government.
  • We will keep an eye on this new forum, but we are skeptical that investors will agree to submit to a forum so close to the government for impartial settlement of disputes.



In conclusion, the new investment law has been awaited for so long. While nothing really earth shattering was introduced in terms of incentives, some of the procedural improvements to the interface between investors and the regulator are much needed.  In our opinion, they will have a huge impact on improving the investment climate.  However, much really depends on the “on-ground” mechanisms put in force to implement these measures.  The Executive Regulation of the law is expected to be issued by the Prime Minister in one month.  It will either make or break the investment law.