Free Zones in Egypt: Unlocking Economic Potential for Investors
Free zones in Egypt form the cornerstone of the country’s strategy to attract investments and create a prosperous economy. By offering tax exemptions and simplified customs procedures, these zones serve as hubs for various industries, from manufacturing to logistics and maritime services. Below is a comprehensive overview of the types of free zones in Egypt and the unique benefits they provide to investors.
Definition of Free Zones
A free zone is a part of a country’s territory that falls within its borders and under its administrative jurisdiction, where special tax, customs, and monetary regulations are applied.
Permissible Activities in Free Zones
All investment activities are allowed within the free zones, following the policies set by the General Authority for Investment and Free Zones, with a primary focus on export-oriented industries. However, the following industries are excluded:
- Alcohol and spirits manufacturing.
- Weapons, ammunition, explosives, and any industries related to national security.
Law No. 160 of 2023 amending certain provisions of the Investment Law No. 72 of 2017 permits certain previously restricted activities to be conducted in free zones. The amendment to Article 34 states as follows: Upon approval of the Supreme Energy Council, it is permissible to license projects in free zones for activities in the fields of oil refining, fertilizer manufacturing, iron and steel, gas processing and liquefaction, and other energy-intensive industries.
Legislation Governing Free Zones
Free zones are governed by the provisions of Investment Law No. 72 of 2017 and its Executive Regulations and amendments, as well as the Free Zones Management Regulations issued by the Minister of Investment Decision No. 39 of 2019. The General Authority for Investment and Free Zones supervises its implementation.
Types of Free Zones in Egypt
1. Industrial Free Zones:
These zones provide a favorable tax environment to support manufacturing and export-oriented activities, reducing regulatory and logistical challenges, making Egypt an attractive option for investors seeking regional expansion.
Example: The Tenth of Ramadan Free Zone – This zone serves as a major center for various industries, hosting numerous companies specializing in fields like engineering, chemicals, and food products, making it ideal for companies looking to compete in both local and international markets.
2. Maritime and Logistics Free Zones:
These zones cater to companies operating in maritime services, shipping, and logistics, enhancing Egypt’s strategic role in global trade.
Example: The Suez Canal Economic Zone (SCZone) – Located on one of the world’s most important maritime routes, this zone provides companies with easy access to global shipping routes. The services available in the zone include ship maintenance, cargo storage, and supporting trade exchanges between Europe, Asia, and Africa.
3. Commercial Free Zones:
These zones are designed to facilitate export and re-export operations, making them ideal for companies focused on international trade and supply chain management.
Example: The Alexandria Free Zone – Known for supporting commercial activities like storage and re-export, this zone provides companies with easy access to European and African markets.
Why Invest in Egypt’s Free Zones?
Egypt combines strategic location, a diverse range of free zones, and competitive incentives, making it an appealing destination for companies worldwide. By designating zones for industries, maritime services, and trade, these areas offer an ideal environment for companies to achieve operational efficiency, expand markets, and increase profitability. Egypt’s free zones are not just an economic opportunity; they represent a growing commitment to positioning the country as a global investment hub, bringing prosperity to both companies and communities alike.
Key Advantages of Free Zones in Egypt
Guarantees:
- No lawsuits can be initiated against projects operating under the free zone system without prior reference to the Authority.
- Projects and establishments cannot be nationalized or confiscated.
- Projects cannot be subjected to administrative receivership, seizure of assets, administrative possession, retention, freezing, or confiscation by non-judicial means.
Benefits:
In addition to the advantages granted by the Investment Law to all projects operating under its framework, one of the key benefits of free zones is the engagement with a single administrative entity—the Free Zones Management—which oversees the project throughout its entire lifecycle with an integrated system of streamlined procedures at various stages of the project, including:
- Issuing all necessary approvals for project establishment.
- Issuing an operational license for the project, which suffices for dealings with all government entities without the need for industrial registry enrollment.
- Completing land reservation and handover procedures for the project from the zone management immediately upon application submission (for public free zone projects).
- Approving construction permits upon submission and review of engineering plans (for public free zone projects).
- Implementing all necessary modifications to the project.
- Finalizing all procedures for the entry and exit of goods to and from the project site through the issuance of import and export declarations and completing all customs procedures.
- Taking necessary steps for project liquidation in the event of voluntary closure.
Conclusion
Egypt’s free zones offer a unique opportunity for companies looking to expand effectively into a rapidly growing market. By reducing costs, simplifying operations, and offering the benefits of a strategic location, these zones act as a bridge connecting Egypt’s economic vision with investors’ goals. Whether in manufacturing, logistics, or trade, the opportunities in Egypt’s free zones are as diverse as the markets they serve.
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