The Egyptian Finance Ministry is weighing requests from some 80 companies to slash customs tariffs on 150 production inputs, three government sources tell EnterpriseAM. The proposed adjustments aim to bolster strategic sectors, including chemicals, home appliances, textiles, automotive glass, sheet metal, and the renewable energy industry.

Tariffs on new categories of production inputs could drop by 10-30%, bringing the effective rate down to a range of 2-5%, we were told. Conversely, tariffs on select imported finished products could climb as high as 60% to provide a competitive edge to local manufacturers.

The primary goal of the new tariff structure is to correct customs distortions where taxes on raw materials sometimes exceed those on finished goods. “We have received numerous complaints from manufacturers regarding customs distortions, where duties on final products are lower than those on production inputs,” one of our sources told us. “This increases production costs and makes it difficult for local products to compete in foreign markets if the status quo remains.”

Why this matters: The potential overhaul aligns with the Madbouly government’s target to raise the industrial sector’s contribution to GDP from 14% to 20% by 2030. To double the industrial workforce to 7 mn and increase the share of green industries, the state is shifting toward more aggressive protectionist policies that favor local production over finished imports.

Officials told us they expect no negative impact on total customs revenue, as the lower rates on inputs will be offset by the higher brackets applied to imported final goods.

What’s next? Beyond the tariff changes, the ministry is preparing to refer legislative amendments for three customs laws to the House. The package includes 29 measures designed to slash customs clearance times, including allowing the installment of customs duties for the first time, accepting both cash and non-cash guarantees, and overhauling the temporary admission system by increasing allowed waste percentages.

AND- The ministry is also considering a proposal from the pharma industry to exempt 18 goods and services from VAT to level the playing field for local pharma manufacturers, a senior government source told EnterpriseAM. Currently, finished imported drugs enter Egypt VAT-free, while local producers pay 14% VAT on essential inputs like raw materials, lab testing, and specialized shipping.

“Why would a company manufacture in Egypt when an imported drug from the UK is fully exempt, while local inputs and safety testing services are subject to 14% VAT?” Egyptian Chambers of Commerce’s pharma division head Ali Auf told EnterpriseAM. Because meds prices are capped by the government, manufacturers can’t hike prices to recoup that 14% VAT., Auf explained.

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