Investment Laws in Egypt: Legal Framework, Incentives, and Challenges

Investment Laws

What Are Investment Laws in Egypt?

Investment is not merely the act of injecting capital into an economic project; it is a structured process shaped by laws, regulations, taxes, and public policies. Without a solid legal framework, investment can become a high-risk venture. For this reason, Egypt, as one of the largest emerging economies in the Middle East and Africa, has continuously updated its investment legislation to attract both domestic and foreign investors, and to position itself as a regional hub for trade, industry, and services.

The core legislation governing investment in Egypt today is Investment Law No. 72 of 2017, also known as the “Law of Investment Guarantees and Incentives,” which replaced Law No. 8 of 1997. Subsequent amendments include Law No. 160 of 2023, which introduced cash incentives for industrial projects, and Law No. 2 of 2024, which focused on supporting renewable energy and green hydrogen initiatives.

Who Is Covered by Egypt’s Investment Laws?

Egypt’s investment laws apply broadly to both local and foreign parties engaged in economic activities within Egypt. The legal framework is designed to ensure equal treatment, investor protection, and regulatory clarity across different forms of investment.

Egyptian Companies

Egyptian-registered companies operating under the Investment Law are fully covered, regardless of ownership structure. These entities benefit from legal guarantees, investment incentives, and protections provided they comply with licensing, reporting, and regulatory requirements.

Foreign Investors

Foreign investors, whether individuals or legal entities, are explicitly protected under Egypt’s investment laws. They are entitled to non-discriminatory treatment, the right to establish and own businesses, repatriate profits, and access investment incentives, subject to compliance with applicable regulations.

Joint Ventures

Joint ventures between Egyptian and foreign partners fall within the scope of the investment framework. These structures are legally recognized and governed by the same investment protections, while contractual arrangements determine ownership, management, and profit-sharing rights.

Part I: Investment Law No. 72 of 2017 – The Cornerstone of Egypt’s Investment Framework

This law forms the backbone of Egypt’s investment system, designed to balance the rights of investors with the state’s right to regulate economic activity.

1. Scope of Application

The law applies to:

  • Domestic and foreign investments.

  • Projects inside and outside free zones.

  • Projects established in investment and technological zones.

2. Core Principles

  • Fair Treatment: All investors are treated equally.

  • Protection of Ownership: Property may only be expropriated for public interest and with fair compensation.

  • Protection from Confiscation: Investor assets cannot be seized except by final judicial ruling.

  • Free Transfer of Profits and Capital abroad in convertible currency.

  • Dispute Resolution Mechanisms through specialized committees or arbitration.

3. Guarantees Granted to Investors

  • The right to establish companies and own property required for projects.

  • Licensing and approvals within a fixed timeframe.

  • The right to employ up to 10% foreign labor (up to 20% in special cases).

  • Protection from retroactive changes in legislation.

Part II: Investment Incentives

1. General Incentives

  • Tax reductions for projects in underdeveloped regions.

  • Refund of a portion of industrial land value if production starts within two years.

  • Customs and tax exemptions for certain equipment and raw materials.

2. Special Incentives

  • Tax deductions of up to 80% of paid-in capital.

  • Maximum benefit period of seven years.

  • Granted to strategic and industrial projects.

3. Additional Incentives

  • Dedicated customs offices for large projects.

  • State contribution to infrastructure costs.

  • Exemption from land use fees for up to ten years.

Part III: Recent Amendments

Law No. 160 of 2023

This amendment introduced a cash incentive for industrial projects:

  • Refunds ranging from 35% to 55% of corporate income tax paid.

  • Requires a significant portion of funding to be in foreign currency.

  • Targets priority sectors such as technology-intensive and heavy industries.

Law No. 2 of 2024

  • Provides incentives for green hydrogen and renewable energy projects.

  • Exemptions from Value-Added Tax on specific project inputs.

  • Reductions in port fees and real estate usage costs.

  • Aims to position Egypt as a regional hub for clean energy production.

Part IV: Rights of Foreign Investors

  • Equal treatment with domestic investors.

  • Freedom to bring in and repatriate capital.

  • Free transfer of profits abroad.

  • Protection against nationalization and confiscation.

  • Investment residency granted for the duration of the project.

Part V: Geographic Distribution of Incentives

To encourage investment in less developed regions, the law divides Egypt into geographic sectors:

  • Zone A: Includes governorates most in need of development, offering major tax benefits.

  • Zone B: Includes other regions with relatively fewer incentives.

This distribution helps balance development across different areas of the country.

Part VI: Challenges Facing Investors

Despite the advantages offered by the law, investors still face several challenges:

  • Bureaucracy: Administrative complexity in certain government agencies.

  • Frequent Tax Law Changes: Businesses must continuously adjust to updates.

  • Infrastructure Gaps: Some regions still lack adequate infrastructure.

  • Access to Foreign Currency: Can be challenging during times of economic pressure.

Part VII: Opportunities

  • Egypt’s strategic location on the Red Sea and Mediterranean.

  • A large domestic market of over 105 million people.

  • Free trade agreements with Africa, the Arab world, and Europe.

  • Expansion in renewable energy and infrastructure projects.

  • Clear government strategies for attracting foreign direct investment (FDI).

Part VIII: Role of Investment Advisors

Navigating Egypt’s investment laws requires expertise. Professional advisors play a vital role in:

  • Selecting the most suitable legal structure for companies.

  • Maximizing benefits from available incentives.

  • Managing compliance with tax and legal frameworks.

  • Representing investors before government authorities.

Frequently Asked Questions

1. What is the primary law governing investment in Egypt?
Investment Law No. 72 of 2017.

2. What are the most recent amendments?
Law No. 160 of 2023 (cash incentives) and Law No. 2 of 2024 (renewable energy projects).

3. Do foreign investors enjoy the same rights as local investors?
Yes, with full legal protections.

4. What is the maximum duration for special incentives?
Seven years from the start of operations.

5. Which sectors currently benefit most from incentives?
Industrial projects, renewable energy, and strategic national projects.

6. Can foreign investors own 100% of a company in Egypt?

Yes. Egypt’s investment laws allow full foreign ownership in most sectors, subject to sector-specific regulations and approvals.

7. Is prior government approval required for foreign investments?

In most cases, no prior approval is required, but certain regulated sectors may require licenses or special permits from competent authorities.

8. Are investors allowed to repatriate profits and capital?

Yes. Investors are entitled to freely repatriate profits, dividends, and invested capital in foreign currency, in accordance with banking regulations.

9. What authority regulates investment activities in Egypt?

The General Authority for Investment and Free Zones (GAFI) is the primary body responsible for licensing, regulating, and facilitating investments.

10. Are investment incentives automatically granted?

No. Incentives are subject to eligibility conditions, sector classification, geographic location, and compliance with statutory requirements.

11. Can investment incentives be withdrawn?

Yes. Incentives may be revoked if the investor violates the conditions under which they were granted or breaches investment obligations.

12. What legal protections are provided against nationalization?

Egyptian investment law prohibits nationalization or confiscation of investments except by judicial ruling and with fair compensation.

13. How are investment disputes resolved?

Investment disputes may be resolved through Egyptian courts or arbitration, including international arbitration where permitted.

14. Are there reporting or compliance obligations for investors?

Yes. Investors must comply with corporate governance, financial reporting, tax filings, and regulatory disclosures throughout the investment lifecycle.

15. Does the investment law apply to free zone companies?

Yes. Companies established in public or private free zones are subject to specific provisions under Egypt’s investment law and related regulations.

References

  • General Authority for Investment and Free Zones (GAFI).

  • Investment Law No. 72 of 2017.

  • Law No. 160 of 2023 on investment incentives.

  • Law No. 2 of 2024 on renewable energy and hydrogen.

  • PwC and Deloitte reports on Egypt’s investment climate.

  • World Bank reports on investment environment in Egypt.