Free Zones are one of the distinguished investment patterns where you can establish, set up and start your own project under the umbrella of this system according to the provisions of Incentives and Securities of Investment Law No. 8 of 1997, its executive regulation and their modifications. This system is applied by General Authority For Investment and Free zones (GAFI).
A free zone is a part of the state land that exists within its political boundaries and subjected to its administrative authority. The treatment aspects that are related to goods movement, either in and out, in relation to customs, import, monetary system and other aspects of dealing differs from the procedures applied inside the country in regards to the similar transactions.
There are two patterns of free zones:
1- Public Free Zone:
It is a piece of land completely surrounded by fences and is specified for establishing industrial, service, and storage investment projects into which the areas are allocated for projects for an annual usufructuary right\m2, and according to the benefits and stipulations specified in law 8 of 1997 for investment insurances and incentives, its executive regulation and their modifications.
The government has held 9 free zones distributed all over the republic and supplied with facilities and essential infrastructural services such as electricity, water, sanitation, telecommunication, and natural gas needed to, receive, setup and run the investment projects. In addition to an integrated and independent customs unit in each zone for serving the projects there, a unit for ports security police plus a security unit at each a free zone for security it 24 hours a day.
It was taken into account when choosing the sites of the public free zones for establishment … to be exist inside or near to large cities where workers and supporting factors are available in order to attract the investment enterprises to them, adding to being near to sea and air ports.
2- Private free zone:
It is a piece of land that is located out of the boundaries of the public free zone, which is specified for one investment project because of lack of areas on the public free zone or because of this location have a positive influence on the economies of running this project such as being near to raw materials, one of the export ports, or a certain highway for considerations of material transportation or product exportations.
The investor usually chooses the location of his project meant to be a private free zone either by transferring property or hiring for his own favor, moreover he undertakes supplying the utilities to this site and providing the representatives of customs, ports security and the authority to clear the procedures of goods’ entrance and discharge.
General Authority For investment and Free zones (GAFI) seeks to make the Egyptian free zones a business destination that is able to attract and lever the efficiency of direct investments not only in the Middle East but also all over the world.
Enhancing the contribution of the Egyptian free zones in the world trade movement, the growth of the Egyptian national income, and supporting the national industry inside the country through developing the front and back bonds to supply exportation needs of goods and services required for the associations working under the free zones system.
Supporting investment opportunities and adopting effective policy and culture to serve the investors depending on the importance of investment to push development wheel and leveraging the national income and we aim to:
o Provide real national job opportunities along with developing technical and productive talents.
o Increase hard currency sources by developing exports and providing alternatives for imports.
o Increase employment and working rates of our powers, technical and productive potentials and abilities available.
o Attract the direct local and foreign capitals and making capital accumulation.
o Introduce cutting edge technology to develop powers, technical and productive potentials.
o Develop the front and back bonds to achieve integration among the free zones and the local market.
o Depending increasingly on the national industry to fulfill needs of exportation.
Our social responsibility encourages us to push the investments of our free zones in a bid of serving the surrounding environment.
Why the Egyptian free zone?
The benefits of investment:
1- Able to choose your field of investment.
2- No limitations to transfer profits and invested money.
3- Able to import from local and foreign markets.
4- Able to set prices of the products; either services or products.
5- Able to import and export and registering in exporters and importers record.
1- Lack of restrictions on the capital nationality.
2- Lack of limits on the amount of capital.
3- Imports and exports of the project are not subject to import and customs rules applicable in the country.
4- Foreign investors are granted facilities to stay in the country.
5- Foreigners who work in the project are granted residence permits based on their request.
1- Exempt the capital assets of the project and the production requirements from taxes and customs fees.
2- Exempt the exports and the imports of the project from and to abroad from taxes and customs fees.
3- All the local components are free from customs fees in the case of selling in the local market.
4- Incoming goods included in the definite destination transit commerce are free from the free zone fees once they are in.
1- Guarantee no nationalization and seizure to the project.
2- Guarantee no filing a public lawsuit against the project except after taking the approval of General Authority For investment and Free zones (GAFI).
Fees For services
(1\2 per a thousand annually) of the investment costs of the project, minimum 100 Dollar and maximum 1000 Dollars or what equals in other free currencies.
It is calculated according to the nature of the project activity as follows:
1- The manufacturing project shall pay it according to the value added to the commodity in manufacturing or what assembly process it has when out of the free zone.
2- The Storage project shall pay it according to the values of the goods coming to the project immediately after its entering to the free zone with exempting the definite destination transit commerce from this fee.
3- The services project shall pay it that its basic activity does not require entering or exiting goods based on the total income of revenues.
One per thousand of the insurance value is what provided by the Authority to the Egyptian Customs Authority as an insurance of the customs taxes and duties on the goods according to what is determined by the customs authority during moving or transporting the goods from the customs circles to the free zones or vice versa; or between the free zones among each other according to the project request and following submitting an insurance policy against the robbery, fire risks, loss and damage of those goods with the full value of the insurance presented by the authority.
letter of indemnity
The project shall provide a final letter of indemnity under the name of General Authority For investment and Free zones (GAFI) to guarantee its payment the commitments such as fees that are due in case not able to repay. The letter shall be valued according to the nature of the project as follows:
1% of the investment costs for “the industrial activity” 5000 dollars at minimum, and 50000 dollar at maximum or what equals in other currencies.
2% of the investment costs of “the storage activity” with 10000 dollars at minimum and 100000 dollars at maximum or what equals in other currencies
1% of the investment costs of “the services activity”
With 10000 dollars at minimum and 100000 dollars at maximum or what equals in other free currencies.
In the all previously mentioned cases the authority shall commit itself to the following:
1- Reducing the financial guarantee with a (15%) rate, in case of the project pays its value in cash and not less than the specified minimum rate.
2- Reducing the financial guarantee with a (50%) rate in case of the project regulates in paying the authority dues throughout the last three consecutive years and was in good stand with the authority.