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2. Introduction to trade and investment regime
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2.1 Legislation on trade and investment

Legislation relating to foreign trade administration adopted by the Egyptian government at present mainly includes Import and Export Regulations of 1975, Customs Law of 1963, and Trade Law of 1999. The Import and Export Regulations was revised in 2005 and the executive rules of the Import and Export Regulations was also promulgated. In 1998 Egypt promulgated Law on the Protection of National Economy from the Effects of Injurious Practices in International Trade along with its Executive Regulations, which establishes procedures to be followed in anti-dumping, countervailing and safeguards investigations.

The main laws governing investment in Egypt are the Companies Law of 1981, the Investment Guarantees and Incentives Law of 1997 along with its Executive Regulations, and Special Economic Zones Law of 2002. Egypt amended its Companies Law and Investment Guarantees and Incentives Law in 2005.

2.2 Trade administration

2.2.1 Tariff system

To accelerate trade liberalization, Egypt has made major adjustments to its tariff rates and tariff structure. The Presidential Decree 300/2004 reduces the number of tariff bands to six and removes export duties on 25 products which are in short supply in the domestic market. Meanwhile, the Customs has abolished the administrative charges on imported products. The 2005 tariff contains 5,687 lines at the HS eight-digit level, of which 99.8 percent carry ad valorem duties and compound, mixed or seasonal MFN tariffs do not apply. Of all the imported goods, 11 tariff lines carry specific duties.

2.2.2 Import administration

The principle of encouraging the import of raw materials, primary products, and products that are in short supply, incapable of being produced domestically is fully reflected in the tariff regime of the Egyptian Customs. Meanwhile, the provisional release system through Customs risk management and sample inspection is practiced by the Egyptian Customs for the import of primary materials, semi-processed products, and raw and auxiliary materials for producing export products. Import products in line with this system are not subject to Customs import approval, but a guarantee equivalent to import duty value should be deposited.

According to the new Import and Export Regulations, Egypt should facilitate the service-oriented industries such as tourism companies and contractors to import equipment, simplify the procedures of documents for customs clearance provided by importers and of releasing certificates of origin, allow the import of new and second-hand automobiles from non-manufacturing countries. Egypt has adjusted the tariff rate to 40 percent on textiles, garments and clothing accessories on which import ban had been lifted. However, the new Regulations require all the imports should be labeled with international codes.

2.2.3 Export administration

All Egyptian products are free to be exported and are not subject to export licensing.

To encourage domestic enterprises to participate in international competition, Egypt has established the "export incentives fund" in accordance with its Export Incentives Law to encourage export and to enhance its share in the international market.

There is no requirement with regard to the proportion of local content for export products from Egypt, but the tariff policies include provisions encouraging local content. The Customs Law stipulates that a tariff concession of 10 percent-90 percent is granted to the assembly industry when importing components depending on the proportion of the local content in the assembly industry. The higher the local content, the larger the margin of concession. Investment projects in the inland of Egypt (including the newly-established industrial zones and new cities) are not subject to the restriction on export proportion. However, investment projects located in the Egyptian free zones and special economic zones are subject to the restriction on export proportion. Some of these areas are regarded as inside the territory while outside the customs.

2.2.4 Other related systems

According to the Presidential Decree of provisional release and tax rebate, all the Egyptian ports have simplified their procedures of tax rebate for exporters. The tax rebate list of 1800 items jointly drafted by the Ministry of Foreign Trade and Industry and the Ministry of Agriculture specifies the rate of tax rebate based on the foreign proportion of raw materials in each item. Exporters can get their tax rebate by providing export documents and enjoy tax rebate equivalent to 4 percent to 10 percent of the export value according to the regulation.

In the end of 2005, the Egyptian Customs established a large service center of customs clearance for importers, providing fast and convenient customs clearance services for registered importers. In the center, each importer can be accompanied by a staff member and be assisted in going through the relevant procedures.

2.3 Investment administration

There is no specific law on foreign investment. Foreign investors may choose to invest in Egypt either under the Companies Law or the Investment Guarantees and Incentives Law, depending on the types of incentive sought and the areas in which the investment is to be made. Investment can be made through joint- ventures, limited liability companies, partnerships and "inland investments". Unlike the Companies Law which applies to all investment, the Investment Guarantees and Incentives Law applies to domestic or foreign investment in certain specified activities or sectors. Main taxes in Egypt include salary tax, income withholding tax, unified tax on individual income, corporate profit tax, real estate tax, customs duties, sales tax, stamp tax and development tax. Export commodities are covered by the tax rebate policy which is not applicable to projects in free zones according to the prevailing Egyptian tax regime.

The Income Tax Law of 2005 stipulates that start-up companies with the financial support of the Social Development Fund are entitled to a five-year tax holiday and those individually-owned companies are entitled to a three-year tax holiday.

Six free zones of Alexandria, Cairo and Suez, etc. as well as 12 new cities and a number of industrial zones have been set up nationwide in Egypt. Enterprises located in these special zones enjoy a series of preferential policies.

2.4 Competent authorities

The competent authorities responsible for trade and investment affairs is the Ministry of Foreign Trade and Industry of Egypt with the affiliated organization of General Organization for Import and Export Control (GOIEC) being in charge of the inspection of all import commodities.

Affiliated to GOIEC, the Administrative Bureau of Countries of Origin is responsible for researching on trade preferential arrangement and non-tariff barriers, publishing information, issuing certificates of origin, and conducting business administration of the sections in charge of countries of origin in different departments. The Central Department of International Trade Policies in the Ministry of Foreign Trade and Industry is responsible for countervailing, emergent safeguards and anti-dumping issues.

In line with the Presidential Decree, the Ministry of Foreign Trade and Industry will set up the General Authority for Industrial Development to replace the former General Authority for Manufacturing. Its main functions include formulating and implementing the plans and policies of deepening domestic industrialization, increasing the proportion of domestic raw materials in production, and raising the added value of Egyptian products gradually. It is also in charge of setting the prices of land for industrial use in each province and industrial zone, implementing the industrial policies made by the Ministry of Foreign Trade and Industry, encouraging investment, providing convenience for investors, improving the investment environment of the industrial zones together with the General Authority for Investment and Free Zones, and making and publishing the specifications and standards for each industrial project.

The Ministry of Investment of Egypt is in charge of foreign investment policies, coordinating the departments relevant to investment and providing services of dispute settlement for investors. The affiliated organizations include Capital Market Authority (CMA), General Organization for Insurance Control and the General Authority for Investment and Free Zones. Affiliated to the Supreme Committee of Investment, the General Authority for Investment and Free Zones (GAFI) is the executive body of investment, managing foreign investment projects and free zones, taking the responsibility of formulating and amending the Investment Law, improving foreign investment environment, examining and approving foreign investment projects, providing administrative and consulting services, and providing information.

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