Investment Incentives Designed by New Investment Law
The new Investment Law no. 72 of 2017 distinguished among four of the investment systems; the internal investment system, the investment zones system, the technological zones system, and the free zones system. The distinguish point is obviously represented on that the incentives allocated to the first three systems are different and less than the incentives granted to the last system called “the free zones system”. Such last system that kept, under the new law, the same privileges that were adopted under the previous law, representing on exempting its goods whether exported to or imported from abroad from the customs, added value tax, and the other taxes and charges.
However, the incentives adopted to the projects established under the internal investment system, the investment zones system, or the technological zones system, are as follows:
1. Exempting the establishment contracts, Credit facilities contracts, mortgages contracts, and the lands registration contracts, from the stamp tax and from the registration or authentication charges for five years,
2. Non-subjection of the aforesaid projects’ imported capital assets to other than unified customs tariff of 2%,
3. Non-subjection of the aforesaid projects’ imported models, templates, and any other manufacturing requirements having similar nature to any customs charges on condition that it have to be exported within certain period,
4. Granting the projects, established after this law’s enforcement date, the right to deduct a percentage from its net profits subjected to the tax for seven years effective from the date of commencing its activity. This percentage reach to:
50% For the projects established on sector (A) that represents the most geographical areas in need.
30% For the projects established on sector (B) that represents the republic remaining areas, whenever it came under the following projects:
– Employment-intensive projects,
– Projects depend on the renewable energy,
– National and strategic projects (specified by the supreme council),
– Tourism projects (specified by the supreme council),
– Electric production projects (specified by the cabinet),
– The projects whose production exported,
– Auto industry,
– Furniture industry,
– Food industry,
– Engineering industry,
– Metal Industry,
– Textile industry, and
– Leather industry.
5. Possibility of granting the projects established after this new law’s enforcement date, the following additional incentives by a decree issued from the Prime Minster:
– Establishing customs port for its exports or imports,
– Bearing the cost of constructing the public utilities by the state,
– Bearing the cost of the employees; training by the state,
– Refunding half of the land’s price value if the production is commenced within two years, and
– Allocating lands for free to the strategic projects, and
6. Granting the investor the right to obtain the real estate needed to practice the investment activity (sale-lease-usufruct) whether from the entity which has competence according to its law and regulations, or directly from the GAIFI upon an invitation, publication or the investor’s request.
Finally, we would refer to the fact that neither the executive regulation, nor the ministerial decrees, nor the prime ministerial decrees, to which the law referred several times, shall decrease or amend any of the incentives mentioned herein above; as definitely known, it will only detail what is outlined on the law.
Consequently, the new law set out to draw the procedures of getting many incentives promulgated thereon, particularly the incentive of obtaining the real estate needed to practice the investment activity. Hence, getting the said incentives are not dependent on issuing those ministerial decrees that might take time longer than the time needed for issuing the executive regulation, especially, the law specified the time of issuing the regulation (ninety days) opposite to the said other decrees.
Accordingly, there is no reason, after the issuance of the executive regulation, to not commence in using the investment incentives by the investors, particularly, the new investment law itself ranks the priority of investors by the precedence of submitting to the GAFI authority their requests of obtaining a lot of the incentives.
Therefore, we, at Badawy Law Office, have indeed commenced in initialing the legal procedures on behalf of many of our clients in this regard.