The Supreme Council for Investment (SCI) formed by Decree of the Egyptian President on 18 October 2016 held its very first meeting earlier today. It issued the following resolutions:
- Free allocation of industrial land in the Upper Egypt with existing utility connections, subject to the terms and conditions to be set out by the Industrial Development Authority (IDA) in accordance with the national investment plan.
- Exempting agricultural land reclamation projects producing essential crops which are currently imported or crops which are destined for export from income tax.
- Exempting the new agricultural and industrial investment in the Upper Egypt from income tax for a period of five years from the date of land allocation.
- Exempting the new projects producing strategic goods which are currently imported or goods which are destined for export from income tax for a period of five years.
- Extending the freeze on the implementation of the capital gains tax for three years.
- Granting a 35% discount on the price of land determined by the Higher Committee for Public Land Recovery for a two-month period ending in December 2016.
- Undertaking all necessary legal proceedings for the settlement of any tax claims against small and medium enterprises currently having no tax file, against the payment within a two-month grace period of a symbolic flat fee for every year of unreported activities until 2017, such that these enterprises would be allowed to benefit from the Central Bank of Egypt (CBE)’s initiative for the provision of funding to SMEs with 5% interest, as well as to benefit from the availing of land to investors.
- Authorising the IDA to issue temporary industrial licences for a one-year term until industrial plants have been able to regularise their status, in accordance with the rules to be set out by the Minister of Trade and Industry.
- Availing land for allocation in the New Administrative Capital and new cities in East Portsaid, Alamein, Galala and New Ismailia, in consideration for fees discounted by 25% for a period of three months.
- Availing new land connected to utilities for allocation for EGP 500 per sqm ready within one year, in New Minya, Sohag, Assiut and Beni Suef cities.
- Increasing the number of State-owned companies share capital would be offered to the public (IPO) up to 24%, including the projects of the Egyptian Countryside Development Company, New Administrative Capital, New Alamein City and power plants.
- Limiting the enforcement of the decisions of the Ministerial Committee for the Settlement of Investment Disputes to fifteen days.
- Setting up a national council for payments to reduce the formal utilisation of cash outside of the banking sector.
- Instructing the Technical Secretariat of the SCI to hold meetings with the business community to study all proposals for the facilitation of investment.
- Activating the partnership with the private sector through the Public Private Partnership (PPP) Unit and identifying the optimal institutional framework for it.
- Forming a permanent committee within the Ministry of Investment to study investors’ complaints, which would directly report to the SCI.
- The establishment by the General Authority for Investment and Free Zones (GAFI) of a company for internal and external investment promotion.
Although very promising for investors looking at new business sectors in Egypt, the above incentives do not apply automatically. The SCI instructed the relevant ministries and government entities to issue the necessary decrees and regulations or lobby for the issuance of the relevant laws for the implementation of the above resolutions, and tasked the SCI Technical Secretariat with reporting the progress to the SCI during its coming meeting. The mechanism of putting in place the various exemptions and incentives remains to be seen.
The SCI groups the Prime Minister, the governor of the Central Bank of Egypt, the Ministers of Defence and Military Production, Finance, Investment, Interior, Justice, and Trade and Industry, the head of the General Intelligence Service, the head of the Administrative Control Authority, the CEO of GAFI, the chairman of the Federation of Egyptian Industries and the head of the Egyptian Federation of Investors Associations. It is tasked with updating Egypt’s investment map and developing a general framework for legislative and administrative reform, and monitoring the implementation of plans and programmes related to investment and the progress achieved with regard to major economic projects.