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Wednesday, 16 March 2022

Tax incentives announced for green + emerging investments

Gov’t announces tax breaks to boost green economy + other emerging sectors: The government has widened the number of companies eligible for tax incentives under the Investment Act as it looks to stimulate investment into strategic areas of the economy. Companies working on a wider range of renewable energy and manufacturing projects will now be able to deduct 30-50% of their investment costs from their tax bills under a decision announced yesterday by Prime Minister Moustafa Madbouly, cabinet said in a statement. Certain activities in the education and sports sectors have also been added to the legislation.

Who’s eligible? Companies working on the following projects will now benefit from the tax incentives in the 2017 legislation:

  • green hydrogen and green ammonia production, storage and export;
  • the manufacture of plastics-alternatives;
  • establishing schools, technical education colleges, and universities;
  • setting up sports facilities.

What incentives will they get? Companies who invest in specific sectors and areas of the country see tax breaks calculated on the amount invested in the project. The legislation also hands companies a flat 2% customs rate on machinery imported for the project, and a five-year exemption from stamp duty and notary fees on certain expenses.

You also need to be in specific areas of the country to get the most benefit: Projects in priority development areas such as the Suez Canal Economic Zone, the new capital and Upper Egypt receive 50% of their investment dedicated from their tax bills, while investment into “sector B” areas receive the 30% deduction. Sector B projects must be either labor-intensive, SMEs, powered by renewables, or export-oriented, according to the law.

Further incentives will be on offer for companies working in other sectors: Companies investing in the green economy, AI, research and innovation, workforce upskilling, and localizing industry will be granted other incentives, the statement said, without providing further details.

Cabinet ministers approved the tax breaks last week, as part of a wider package of incentives put forward by the General Authority of Investment and Freezones.

OTHER INVESTMENT NEWS-

Lamar is looking to invest EGP 500 mn over the next three years: Alexandria Agricultural Company (Lamar) is looking to invest at least EGP 500 mn over the coming three years to expand production and strengthen its transport fleet, CFO Youssef Talaat told Bloomberg Asharq. The firm also plans to build new factories within three to five years, he added. The dairy and juice maker invested EGP 250 mn last year, Talaat said.

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