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The state expanded the types of businesses eligible for special tax incentives, hoping to attract investors, reduce reliance on imported goods, and build strong local supply chains, according to a decree by Prime Minister Moustafa Madbouly. Companies that invest in strategic industries, including automotive, appliances and engineering, food, and chemicals, will get a large discount on their taxes spread over seven years. They are allowed to deduct up to 50% of their initial investment costs directly from their taxable profiles. The size of this tax discount depends on where the business is built.
Two geographic zones: To make sure that all parts of the country develop evenly, the government divided the incentives into two zones. Zone A, which includes the areas that need the most economic push — such as the most in-need regions, Upper Egypt, the New Capital, and the Suez Canal Economic Zone — will get a 50% tax discount. Zone B, on the other hand, which covers the rest of the country, will get a 30% tax discount.
The industries: To support value-added industries and deepen local manufacturing, the decree adds several high-priority industrial activities to the incentives program. In Zone A, newly eligible activities include the manufacture of all types of vehicles (traditional and electric), electric motors, refrigerator evaporators and compressors, sheet metal for electrical and electronic appliances, pipes and tubes, fruit and vegetable concentrates, and concentrated sulfuric acid. Meanwhile, the eligible additions for Zone B specifically include vehicle manufacturing, refrigerator evaporators, fresh fruit and vegetable concentrates, and concentrated sulfuric acid.
Why it matters: The government is doubling down on tax-based incentives to steer industrial investment toward priority sectors and underdeveloped regions while trying to deepen the local component in key industries.
What’s next? The Investment Ministry is studying adding further industrial activities targeted for localization, suggesting this list may further expand in the coming months.
