Incentives for Special Zone of Development > Free Zones

Egyptian, Arab and foreign investors may carry out projects in the Egyptian free zones, regulated by the Investment Law. Most goods and materials imported to a free zone are not subject to import duties or regulations.

There are two types of free zones, public and private. Public free zones are established in specific locations by cabinet resolution upon the proposal of GAFI. Such locations include areas in Alexandria, Suez, Port Said and Cairo. Private free zones are established exclusively for a specific project or company.

The following should be the grounds on which GAFI grants its approval for converting a project set up inside the country to a private free zone:

1. The project shall have already started its activity.
   
2. The project's exports shall be at least half of its products.
   
3. The project shall fulfill the requirements of free zones administration regarding buildings, fences and security

A company formed to operate in a free zone is exempted from all Egyptian taxes for an unlimited period.

However, free zone projects are subject to a duty of 1% of the value of goods entering the free zone for storage in respect of warehousing projects and 1% of the value of goods leaving the free zone in respect of manufacturing and assembling projects. Projects maintaining activities that require no entry or exit of goods are subject to an annual fee equal to 1% of their total revenue, based on audited accounts.

A project by establishing a Private Economic Zone.

A project by establishing a new economic zone is expected to be submitted to parliament. The project propose establishing a governmental entity "Institution" that shall be responsible for developing the Zone and specifying the conditions and requirements for licensing projects established therein.

The Institution shall substitute the Companies Authority, Commercial Register, Taxes Authority and Tariffs Authority in all its powers and jurisdictions. The institution shall establish a supreme committee for taxes and another one for tariffs. The challenges against the resolutions of the supreme committees shall be submitted to the Mediation committee in the settlement of disputes center of the Zone. It is not permitted to submit taxes or tariffs challenges to Arbitration or judiciary prior to Mediation committee resolution.

Under the project, companies located at the Zone are granted guarantees against expropriation and nationalization. Companies and their assets cannot be attached, seized or expropriated unless by a court order. The project further provides no administrative body may interfere in setting prices or revoke or suspend a license for the use of property except where the license terms are violated. The regulations regarding the employees' share in profits and the employees' participation in management are not applicable to companies conducting its activity at the Zone.

Under the project persons or companies located at the Zone are subject to a unified tax equal to 20% from there net revenue from movable capitals, property, non commercial carriers, commercial and industrial activities in addition of a unified income tax equal to 10%. The Zone is not subjected to sales tax laws, stamp duty law nor notarization and publication fees and not subjected to any taxes (except stated above). Companies located at the Zone are exempted from taxes on loans' interest rates.

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