{"id":591316,"date":"2019-12-03T04:27:36","date_gmt":"2019-12-03T04:27:36","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/12\/03\/regulations-for-egypts-new-export-subsidies-framework\/"},"modified":"2019-12-03T04:27:36","modified_gmt":"2019-12-03T04:27:36","slug":"regulations-for-egypts-new-export-subsidies-framework","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/12\/03\/regulations-for-egypts-new-export-subsidies-framework\/","title":{"rendered":"Regulations for Egypt\u2019s new export subsidies framework"},"content":{"rendered":"

<\/a> Executive regulations for the nation\u2019s new export subsidies framework have<\/strong> leaked, <\/strong>but industry<\/strong> still has questions: <\/strong>The executive regulations of the state\u2019s new export subsidies framework, which were ratified by Prime Minister Moustafa Madbouly earlier this week<\/a>, were circulated by the state-run Export Subsidy Fund to export councils around the country. The initial reaction from a number of industry councils is that the regulations stop short of defining some key terms and need to provide more on how the framework will be implemented. The regulations are meant to govern how EGP 6 bn allocated by the government at the start of the fiscal year will be spent to support exporters.<\/p>\n

Click \/ tap here (pdf)<\/a><\/strong> for a copy of the regs <\/strong>that was received by the Food Export Council.<\/p>\n

Industry councils are hoping for more clarity on key definitions as they sit <\/strong>down with officials <\/strong>including Export Subsidy Fund head Amany El Wassal, sources told the domestic press<\/a>. Reports suggest that the final version of the regulations is different from that to which the councils had agreed in recent meetings with the fund. Agricultural Export Council executive director Hany Hussein said his council will not be sending out copies of the regs to businesses until they receive some clarity.<\/p>\n

So, what\u2019s unclear? For starters, the definition of the 40% value-added rate <\/strong>required for any export to be eligible for subsidies, a term that generally refers to local content that a manufacturer must include a product for it to be eligible.<\/p>\n

The fine points on how annual allocations are paid out is also unclear. <\/strong>Subsidies will take the form of direct cash payments (40%), tax breaks (30%), and investments by the fund to improve Egypt\u2019s \u201cexport infrastructure\u201d (30%). The regulations don\u2019t make clear how tax credits would work (including whether they could be deferred), nor do they make clear priorities for support for \u201cexport infrastructure\u201d (which could include trade fairs, trade missions, and market research studies).<\/p>\n

How will the exporters be paid? <\/strong>Exporters will be getting back a certain percentage of the total value of products they sell abroad. The exact percentage will depend on the industry and will increase as companies source more of their inputs locally. Freezone companies will be receiving 50% of the rate specified for their non-freezone counterparts. It\u2019s unclear if payments will be made on a quarterly, yearly, or other basis.<\/p>\n

How much will they be receiving? <\/strong>The percentages for three of the industries covered by the framework \u2014 food processing, engineering, and furniture manufacturing \u2014 made it to the local press yesterday. The breakdown is as follows:<\/p>\n