EGYPT Law and Practice Contributed by: Mohamed Hashish, Heba El Abd, Farida Rezk, Omar Aboul-Ella, Mariam Rabie and Mohamed Selim, Soliman, Hashish & Partners
• electric bus manufacturers: 2% of the value or the applicable import tax, whichever is lower on batteries, electric motors, control units, auxiliary system units, steering units, battery cooling units, and air conditioning devices; • mobile phone manufacturers: 2% of the value or the applicable import tax, whichever is lower on batteries, speakers, and cameras; and • natural gas vehicles: 35% reduction on the applicable import tariff. Incentives for Local Assembly Industries The Customs Tariff Decree sets out the con - ditions under which assembly industries may obtain permission to have their assembled prod - ucts treated under customs supervision, with preferential treatment for customs duties. In this regard, completely disassembled parts import - ed for industrial assembly under the supervi - sion of the Customs Authority may benefit from a reduced import duty. Specifically, it shall be subject to the customs duty applicable to the complete product, reduced by 10%. Furthermore, where the local manufacturing component of the product reaches at least 10%, the imported foreign components may be subject to a reduced customs duty – lower than that applicable to fully finished product – based on a graduated scale. This reduction may reach up to 90%, or alternatively, the product may be subject to its individual component duty rates, whichever results in a lower duty. However, this preferential treatment is contingent upon the local manufacturing percentage reaching 60%, a threshold that can be lowered to 40% by vir - tue of a decision from the Minister of Trade and Industry.
The local manufacturing percentage shall be cal - culated based on the contribution of the assem - bly line, as determined by a decision from the Minister of Trade and Industry for each assem - bly industry individually. This percentage shall be supplemented by the ratio of locally manufac - tured components to the total complete compo - nents constituting the final product, as specified by the General Authority for Industrial Develop - ment, in accordance with the project establish - ment licence issued. Moreover, the Minister of Finance, upon the request of the Minister of Trade and Industry, may grant companies involved in assembling complex industrial products an advance reduc - tion in customs duties of up to 40%, even prior to the fulfilment of the required local component levels. This preferential treatment is conditional on achieving the stipulated local component within a specified timeframe outlined in their industrial licence. The General Authority for Industrial Develop - ment, in co-ordination with the Customs Author - ity, shall monitor these companies’ compliance through annual reporting to the Minister of Finance. In the event that a company fails to meet its targeted local component level by year- end, the preferential treatment shall be revoked. Consequently, the company will be reassessed under the standard customs rules. It must also reimburse any resulting financial discrepancies along with statutory interest calculated at the highest applicable legal rate for the period in which the benefit was enjoyed.
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