Introduction
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.
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.
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.