Tax Holidays:

Tax holidays under Law 8 of 1996 cover corporate profit, personal income and taxes on dividends, and custom duties.  These are granted for five to ten years, extendible to twenty.  Established project expansions are granted extra five years.  Dividend income received preferential tax treatment even after the expiry of the tax holiday.  All imported machinery and equipment  enjoy a reduced customs rate of five percent.  Law  “8” companies employing Egyptian labor are also exempted from requirements to participate in the Egyptian Social Insurance Scheme. Each company may put together its own social insurance scheme provided it offers equal or better benefits to its employees.  The payments made to non-Egyptian experts are exempted from the tax or income, provided their stay in Egypt is for less than a year.  All capital and profits may be repatriated freely.

Financial Leasing :

In the aim of providing alternative financing to enterprises, the Government of Egypt has issued Law No. 95 of 1995, introducing Financial Leasing in Egypt as another unconventional source of finance other than bank financing.

Under Law No. 95 of 1995, the leaser is to purchase the assets and then re-lease them to the lessee for a certain contractual period.  By the end of the said term, the lessee has the option to purchase the asset, return it to the lease or extend the contract for a further period.  This provided a supportive mechanism to growth and investment via supplying investors with capital assets, facilitating the continuous replacement and renewal of equipment, and allowing for transfer of technology.   

From another angle, financial institutions would have a better opportunity to utilize the excess liquidity to finance investment-related activities.   

Tax Holidays and other Exemptions:

¨      A  project is exempted from corporate tax for five years starting the first financial year following the commencement of the company’s activities or production activities.

¨      A five-year exemption on income and distributed profits commencing from the first financial year following the start of business activity.

¨      A twenty year exemption on income and profits commencing on the first fiscal year following the start of business activity in Kharga, Baris and Farfara oases, East Owaynat and Toshka regions.

¨      Projects established in new urban communities, industrial parks and remote areas enjoy a tax holiday of ten years.

¨      Expansions are granted a tax holiday of five years.

¨      The project is allowed to import its equipment and machinery, spare parts, and vehicles without the need to be registered on the importation registry.  Similarly, it may export its products without being registered on the exportation registry.

¨      Projects are subject to a flat rate of only 5% as custom duties on equipment and machinery imported by the project.

Project contracts are exempted from stamp duties, as well as registration and notarization fees for three years effective as of the date of registration in the Commercial Registry.