Tax Deferral and Exemption for Imported Machinery in Egypt

The due tax on machinery and equipment imported from abroad or purchased from the local market for factories and production units for use in industrial production is deferred for one year from the date of release or purchase. This period may be extended for an additional period not exceeding one year in total, for justified reasons accepted by the authority. If these machines and equipment are used in industrial production during this period, they are exempted from the tax. Disposal of these items for other purposes is prohibited within five years from the date of exemption unless the authority is notified and the due tax is paid according to their condition, value, and the applicable tax rate at the date of payment.

In the event that the machinery and equipment are not used in industrial production within the mentioned period, the tax and additional tax become payable from the date of customs release or purchase from the local market until the date of payment.

Rules and Procedures for Implementing Article (28) Bis of Law 67 of 2016 and its Amendments

Submitting Required Documents:

• The industrial producer must provide the competent customs authority with a certified document from the relevant technical authority stating that the machinery and equipment are intended for use in licensed industrial production for the factory or production unit.
• A certified document from the relevant technical authority must be submitted to the authority, indicating that the machinery and equipment are intended for use in licensed industrial production for the factory or production unit.

Importing Machinery for Trading:

• The importer must present documents proving the supply to the industrial producer for use in licensed industrial production for the factory or production unit, which include:
• A certified document from the relevant technical authority for the industrial producer.
• A supply order issued by the industrial producer to the importer, certified by the relevant technical authority.
• The industrial producer’s registration certificate or tax card.

Duration of Tax Deferral:

• The tax is deferred for one year starting from the date of customs release or purchase from the local market.

Extending the Tax Deferral Period:

• The period may be extended with the approval of the head of the authority for an additional period or periods not exceeding one year in total, based on justified reasons.

Tax Exemption Upon Usage:

• If it is proven that the machinery and equipment are used in industrial production during the tax deferral period, they are exempted from the tax.

Commitment to Pay the Tax:

• The industrial producer must provide a commitment, certified by the bank, to pay the deferred tax and additional tax if it becomes due.

Conclusion

The due tax on machinery and equipment used in industrial production is deferred for one year from the date of customs release or purchase from the local market. This period can be extended for justified reasons for an additional period not exceeding one year. If the machinery is used in industrial production during this period, it is exempt from tax, provided it is not disposed of for other purposes for five years. If not used within the specified period, the tax and additional tax become payable.

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