EGYPT Trends and Developments Contributed by: Inji Fathalla, Salma Nasreldine, Haya El Samra and Ismaël Sedky, Shahid Law Firm
The Special Economic Zones Law In addition to Public and Private Free Zones, Spe- cial Economic Zones (SEZs) are separately regulated under the Special Economic Zones Law No 83 of 2002, as amended by Law No 27 of 2015 (SEZ Law). Tax incentives Under the SEZ Law, SEZs operate under their own independent tax/customs framework, defined by the SEZ Authority. Notably, the SEZ Law provides com- panies established under the SEZ regime with general exemptions from sales tax, stamp duties, development resources fee, and any other direct or indirect taxes/ duties. Additionally, machinery, equipment, tools, raw materials, spare parts and components imported for licensed activities inside the SEZ, as well as vehicles designated for productive industrial or service activi- ties, are exempt from customs duties, sales tax, and all other taxes and duties. Non-tax incentives The SEZ Law further empowers the Council of Minis- ters to grant non-tax incentives. These are essentially operational and cost-reduction supports with cheaper energy, infrastructure refunds, insurance and training subsidies, and favourable land allocation to priority projects in SEZs (namely, projects in logistics, trade development, electricity, agricultural, transport, as well as labour-intensive projects and those that increase local content in their products). The SEZ Law has seen the establishment of the Suez Canal Economic Zone (SCZone), Egypt’s flagship SEZ. Covering six ports and four large industrial/logistics zones, the SCZone has become a global investment hub, drawing multi-billion-dollar investments from international partners. Translating this into numbers, since 2023, the SCZone has attracted more than 272 new projects, with a specific focus on green hydro- gen and renewables, as well as the pharmaceuticals and automotive sectors. Among the most prominent deals are a USD7.6 billion deal for green hydrogen and ammonia project carried out by the Green Fuel Alliance and a joint venture between France’s EDF Renewables and the Egypt-UAE firm Zero Waste. Other notable deals in the SCZone include a USD1 billion transac- tion with Chinese tyre manufacturer Sailun Group for
an automotive tyre plant, and a USD120 million deal with Arab API for a pharmaceutical industrial facility. The Export Subsidy Program In line with the above, Egypt operates an Export Sub- sidy Program designed to encourage domestic pro- duction and enhance the competitiveness of Egyp- tian goods in international markets. The scheme is administered primarily through the Export Develop- ment Fund (established pursuant to Export Develop- ment Law No 155 of 2002), which provides a range of incentives including cash rebates, tax reimburse- ments, and support for transportation and marketing costs. The programme targets a broad spectrum of sectors, notably textiles, agriculture, food processing, and manufacturing, with the objective of diversifying exports and securing foreign exchange revenues. On point, the government has recently revamped its Export Subsidy Program (starting from 1 July 2025, for a duration of three years), with an increase in the Program’s annual budget to EGP45 billion, a boost in subsidy rates across all sectors, simplified and accel- erated disbursements, and a commitment to clear a backlog of overdue subsidy payments. The State Ownership Policy Beyond the EIL, Egypt adopted a State Ownership Policy in December 2022 aimed at strengthening the private sector’s role and creating a more enabling environment for investment. The policy sets out a sector-by-sector methodology identifying where the state will exit, maintain, or increase its presence, with defined exit tracks in non-strategic areas, alongside governance and macro-policy measures to support private activity. The Policy emphasises competitive neutrality, ensuring state-owned enterprises and pri- vate firms compete on equal terms. It additionally encourages public-private partnerships and a wider menu of private participation models in infrastructure and public services, with the Sovereign Fund of Egypt tasked with packaging and offering stakes in state assets to attract private capital and expertise. Looking ahead, the Government has announced in 2025 that it intends to transfer additional state-owned enterprises into the Fund to accelerate divestment, reinforcing the Policy’s role as a cornerstone of Egypt’s privatisation and investment strategy (link).
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