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.
Diverse Attractions and Strategic Location
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.
Tourism Regulations and Legal Framework
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:
Foreign investors receive the same treatment as nationals, with the Prime Minister authorized to offer additional preferential treatment. Non-Egyptian investors are granted residence for the duration of their projects.
The law strictly prohibits the nationalization of investment projects and guarantees the protection of investors’ properties. The state may only expropriate property for the public interest and must provide fair compensation in advance, equal to the property’s market value. Property freezes or seizures are only allowed through a court order, except in cases related to tax and social insurance debt. Administrative authorities cannot impose extra financial or procedural burdens on investors without consultation with the General Authority for Investments and Free Zones (GAFI) and approval from the Cabinet and Supreme Council of Investment.
Investors have full freedom to develop, expand, and finance their projects. They can fully own, manage, and profit from their investments, with the right to transfer profits abroad. Investors may also liquidate their projects and repatriate the proceeds.
Investment projects can employ foreign workers, up to 10% of the total workforce. This limit may increase to 20% if there are no qualified national candidates. Foreign employees can transfer their financial dues abroad either fully or partially.
General Incentives:
- Corporates under this law receive a 5-year exemption from stamp tax and notarization or registration fees on incorporation, credit facility, and mortgage agreements. Additionally, land registration for corporate activities is exempt from related fees.
- These corporates benefit from a unified 2% customs tax on the value of all machinery, equipment, and devices necessary to establish their projects. This reduced rate also applies to public utility projects when importing essential equipment for their operations.
- Industrial investment projects can import molds and matrices for temporary use in manufacturing without incurring 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.
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