Attractive Elements For Tourism Investments In Egypt

user Kholoud Nabil calender 25 Jun 2024 views 185 Views
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Egypt’s tourism industry has long been a cornerstone of its economy, and the country continues to offer a wealth of opportunities for both domestic and international investors. As the sector rebounds from recent challenges, several key elements make Egypt an attractive destination for tourism-related investments.

Egypt offers a unique and diverse array of tourist attractions that cater to a wide range of travelers, from iconic landmarks like the Pyramids of Giza and the Valley of the Kings to stunning natural beauty and vibrant cultural hubs. This diversity enables investors to tap into various niche markets, including cultural heritage, eco-tourism, and adventure travel. Strategically located at the crossroads of Africa, Europe, and Asia, Egypt’s prime geographic position facilitates easy access for international visitors, supported by a well-developed transportation infrastructure.

The Egyptian Tourism Law No.8 of the year 2022  and its Executive Regulation No.705 of the year 2023 outlines clear regulations and licensing requirements for tourism enterprises, ensuring a stable and transparent operating environment.

The mentioned law aims to promote tourism development in Egypt by defining and regulating tourism-related activities and establishments. The law applies to all tourism-related activities and establishments in Egypt, and it defines tourism as any activity that involves the provision of services related to travel, recreation, and leisure activities, including accommodation, food and beverage, entertainment, and cultural attractions. To ensure compliance with the law, tourism-related establishments must obtain a license from the Ministry of Tourism or its authorized representative, which requires meeting certain criteria and standards, and registering with the relevant authorities for activities such as tour guiding and transportation.

In accordance, Egypt has established a comprehensive legal framework to attract and protect investments. The Investment Law No.72 of the year 2017 and  its executive regulations No. 2310 of the year 2017  which provides a range of guarantees and incentives for investors, to attract and protect investments. Some key examples include:

Investment guarantees:

  • The foreign investor shall enjoy a treatment equivalent to that of the national; moreover, the Prime Minister is entitled to provide a preferential treatment to the foreign investor as the Non-Egyptian investors are provided residence during the term of their projects.
  • The law prohibits the nationalization of investment projects and ensures that investors’ properties are protected. The state can only expropriate properties for the public interest and with a fair compensation paid in advance, equivalent to the property’s economic value. Additionally, the state cannot freeze or seize investors’ properties except through a court order or final judicial ruling, except in cases of tax and social insurance debt. The law also prevents administrative authorities from issuing regulations that impose additional financial or procedural burdens on investors, including changes to fees or service returns, without seeking the opinion of the General Authority for Investments and Freezones (GAFI) and approval from the Cabinet and Supreme Council of Investment.
  • The investor has the freedom to develop, expand, and finance their project without any restrictions. Additionally, they have the right to fully own, manage, utilize, and benefit from the project’s profits, and can transfer these benefits abroad. They are also entitled to liquidate the venture and transfer the proceeds of the liquidation back to their country of origin.
  • Investment projects are entitled to hire foreign employees with a percentage of 10% of the total employees of the project, this percentage may increase to 20% in case of inability to employ qualified national employees. Such foreign employees are entitled to transfer all or part of their financial dues abroad.

General Incentives:

  • Incorporation contracts, credit facilities contracts, and mortgage agreements concluded by the corporates governed by this law are exempted from the stamp tax and the fees of notarization and registration for 5 years from the date of registration of such corporates in the Commercial Register. Moreover, the registration of the title of the land required for the corporates’ activities is exempted from the associated notarization and registration fees.
  • Corporates governed by this law shall pay a 2 % unified custom tax of the value of all machinery, equipment, and devices required to establish the project, such rate is also applicable to corporates working in public utility projects when importing the machinery, equipment, and devices required for their establishment or continuance.
  • Investment projects of an industrial nature are entitled to import molds and matrices for temporary usage in manufacturing their products without being charged any customs duties.

Special Incentives:

  • The law provides tax incentives for new investment projects in the form of deductions from taxable net profits. The incentives are:

50% deduction for projects in Sector (A) (regions of highest need of development)

30% deduction for projects in Sector (B) (other regions, including ventures with high employment rates, small-sized enterprises, Tourism projects determined by a decision of the Supreme Council. And those that produce new or renewable energy)

  • The incentives are capped at 80% of the paid-in capital and are only applicable for 7 years from the start of the project’s activity. The Executive Regulations of the law will determine the specific projects and regions that qualify for these incentives.

These incentives and guarantees provided by the aforementioned Investment Law aim to create a favorable and stable environment for tourism investors, reducing operational costs and risks while facilitating the smooth implementation and growth of their projects in Egypt.

In conclusion, Egypt’s tourism sector presents a compelling investment proposition, with diverse assets, a strategic location, a favorable legal framework, specialized investment zones, and a skilled workforce. As the country continues to strengthen its tourism infrastructure and promote its unique offerings, investors stand to benefit from the wealth of opportunities this dynamic market offers.