EXCLUSIVE- Last gasp of the automotive directive? A senior government official tells us the trade and finance ministries are studying a proposal that would impose a 10-20% “development fee” on all car sales — but then offset these for locally assembled or manufactured vehicles, which would be eligible for discounts or waivers of other fees and levies imposed by the state on each car sold and registered in Egypt.

The news comes as the domestic automotive assembly industry braces for the elimination of tariffs on cars imported from the European Union on 1 January 2019. The proposal now being developed could see cars subject to an industry development fee using a tiered system that accounts for engine size and the percentage of domestic content. The proposal would see locally assembled vehicles receiving certain “incentives” that imported vehicles would not be eligible for, the source said, without disclosing further details on what these incentives might entail.

Egypt will bring import duties on European cars to zero as planned, Trade and Industry Minister Amr Nassar told the House Economic Committee this week, according to Al Masry Al Youm. The new industry development fee would not violate that agreement, our source claims, because it would apply to all vehicles.

Background: Government officials had told us last month that the Trade and Industry Ministry had made an official request to delay the customs repeal for another 1-2 years. However, EU Ambassador to Egypt Ivan Surkos confirmed last week that the agreement would come into effect as planned, without making clear whether the EU rejected Egypt’s proposal or if the ministry simply decided to pull it.