The investment law 8/1997 has created two types of investment in Egypt:

I. Free Zone Investment.

II. Inland Investment.

I. Free Zones

The Free Zone is a part of the national Territory of Egypt, but it is considered outside customs boundaries, imports, monetary and duties issues of the country. This imparts much more freedom on transactions and exchanges, aimed at increasing economic growth and attracting foreign direct investment.

Types of Free Zones:

Private Free Zones

Any investment activity in Egypt can be practiced inside a private free zone confined to only one project (or an integrated complex) if the project's nature requires its existence in a private free zone or unavailability of suitable areas in the general free zones or the probability of polluting the neighboring projects (undertaking the removal of all causes of pollution) The investor can get the location by himself and afford the costs of the representatives; customs; and security fees.

Public Free Zones

The state has established 10 Free Zones equipped with facilities and infrastructure. For each zone, there is a board of directors which provides the project with all important facilities, services, and also the annexed lands with suitable areas.

Initially Free Zones were established to achieve the following objectives:

• improve the nation's exports

• attract foreign capital

• introduce advanced technology to the industrial sector of the nation

• provide labor opportunities

1.Privileges and Guarantees available to investors in Free Zones

Advantages

·         Freedom of transferring the invested capital and profits of the project abroad.

·         Freedom of choosing the investment field and the legal formula of the projects.

·         Freedom of pricing the products and profit margin.

·         Non-existence of lower or higher limits for the invested capital

·         Non-existence of limits on the capital nationality so that any investor can invest or participate with a percentage in the investment.

·         Freedom of working for or to others credit in order to exploit the project energies and support the background links with the market.

·         Freedom of importing from the local market with some simplified procedures.

·         Treat the local exports to the free zones equally with exports coming from abroad.

Guarantees and exemptions

·         A legal action against the projects in terms of the breaches of the customs, finance, and tax laws without a reference to the authority may not be taken.

·         The nationalization or confiscation of the projects and establishments may not be applied.

·         Custody on the projects or distress or capturing or desertion, solidification or confiscating may not applied administratively but legally.

• Exempting all capital assets and production requisites necessary for practicing the project (except for vehicles) from any customs – duties or taxes on sales or other kinds of taxes during the project activity even if the nature of the activity necessitates their temporary existence outside the free zone.

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• Exempting the imports and exports of the project to and from the country from any sales taxes or any other kinds of taxes or duties applied in the country.

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• Non-submission of the project and its profits to any taxes or customs laws applied in the country during practicing the project activity.

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• Non-submission of the imports and exports of the projects to any normal customs procedures or exporting rules applied in the country.

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• Exempting the imports of the project from the local market from any sale taxes.

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• Exempting the specifically –directed transit goods from any duties chargeable on the entering and exiting goods.

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• Exempting all the local components of the products. Produced in the free zones projects from any customs duties in the case of their selling to the local market (inside the country).

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• Exempting contracts, loans from the tax stamp registration fees for 5 years.

Exempting the private free zone's land registration fees from the tax stamp.

Public free zones in Egypt:

• Fully equipped with infrastructure

1. Alexandria (El-Amreya).

2. Damietta. 

3. Ismailia.

4. Media Production City.

5. Nasr City.

6. Port Said. 

7. Port Tawfik and Adabbia (Suez).

• Operating and still further developments

1. East of Port Said.

2. Shibin El-koum.

3. Keft.

Features of each Free Zone:

1. Alexandria Public Free Zone:

Alexandria is Egypt's largest seaport on the Mediterranean Sea. The Free Zone is located in Amreyah on the Alexandria to Cairo Desert Road, with a total area of about 5,682,600 m2 and is 20 km from Alexandria seaport and 20 Km from Nozha International Airport. It offers various support services for shipping and unloading; navigation and transport. It is also close to Alexandria, Dekheila, Al Nozha and Borg el- Arab international airports. Alexandria is the biggest Free Zone in Egypt and projects operating there include:

• Chemicals
• Oil refining
• Petrochemicals
• Spinning and weaving
• Ready Made Garments
• Vegetable oils and derivatives
• Assembling industries

2. Damietta Public Free Zone:

Established in 1993, with an area about 798000 m2 it is located on the Mediterranean Sea, adjacent to Damietta Port, which is the largest and most sophisticated container terminal in the Middle East and close to the Damietta Nile Branch (only 55 km west  Port Said port). There is a common access gate between the Free Zone and the port so that all import and export customs procedures are implemented inside the Free Zone area. Rents are reduced 50%.

Damietta Free Zones is known for fine furniture production, as well as:

• Chemical products.
• Seeds treatment (sorting, cleaning and mixing)
• Textiles
• Maritime services

3. Ismailia Public Free Zone:

Located between Port Said on the Mediterranean Sea and Suez on the Red Sea, the Public Free Zone is outside Ismailia City on the main road between Cairo and Port Said covering an area of 325,000 m2, out of which about 420,000 m2 are fully equipped with basic infrastructure. Rents are reduced 50% e.g.:
- USD 1.75 per m2 for industrial projects.
- USD 3.5 per m2 for storage and services projects

93.6% of the industrial output of this Free Zone is textiles. Other products and services include:

• Electronics.
• Software and information systems.
• Metallurgical products.
• Ready Made garments.
• Electrical wire and cable. 
• Chemicals.
• Storage of manufactured products.
• Equipment for petroleum services.
• Leather Products.

4. Media Production City Public Free Zone:

Established in 2000 in 6th October City, Giza this Free Zone specializes in media production and related activities. It has 29 studio complexes equipped with cutting-edge technology, 10 outdoor shooting areas, a five-star hotel, a conference centre, theatres, cinemas, a shopping mall and an amusement park. GAFI has collaborated with professionals in the media sector to adapt the media business to Law 8/1997.

Possible fields of investment in the Media Production City Public Free Zone:

• Radio, television and satellite broadcasting.
• Producing radio, television and cinema programmes, advertising and other artistic production.
• Producing, fabricating and assembling materials and equipment needed for media activities.
• Advertising, information services and public relations.
• Organizing exhibitions for local and international companies that produce media productions and telecommunications equipment.
  Hotels, tourist facilities and shopping malls to serve the Free Zone.
• Banking services.
• Importing and storing machinery, equipment, instruments, tools and spare parts.
• Producing software programs, computer and electronic systems in addition to website designing.

5. Nasr City Public Free Zone:

Established in 1973 and 15 km from Cairo International Airport, this zone has easy access to foreign markets while simultaneously providing a large pool of skilled labour and excellent support services. The total area of the Nasr City Free Zone is about 717,763 m3 (168 Acre).

Nasr City Free Zone concentrates on:

• Automotive wiring products.
• Concentrates for soft drinks.
• Electronics software and information systems.
• Pharmaceutical products.
• Ready Made Garments.

* Industrial activity represents about 93% of total activities of the Free zone.

6. Port Said Public Free Zone:

Port Said is located on the Mediterranean coast at the north entrance of the Suez Canal and is one of the major commercial centers in Egypt, forming a trade hub between the Middle East, Europe and the Far East. The area of the Port Said Public Free Zone is 640.000 m2.

In addition to the two new sites with area about 273.913 m2, Port Said is characterized by:

• Ship building
• Marine equipment production. 
• Textiles.
• Agro-food industries.
• Chemical products.
• Industrial detergents.
• Canned food.
• Ready Made Garments.
• Leather products. 
• Steel rolling mills.

7. Suez Public Free Zone:

The Suez Public Free Zone is located on the Red Sea at the south entrance of the Suez Canal and has two separate sites:

1. Port Tawfik Public Free Zone: located on the southern entrance of the Suez Canal with an area of 75,660 m2.

2. Adabbia Public Free Zone: located directly on the Gulf of Suez with about 247,208 m2.

Suez is a natural focal point between Egypt, the Arab and African countries on the Red Sea, the Indian Ocean, the Arabian Gulf area and the Far East. The city has an abundance of skilled and technical labour and the largest petroleum refinery in Egypt.

The Suez Public Free Zone is famous for:

• Petroleum refinery.
• Fertilizers industry.
• Ship building refractory.
• Warehousing for re-exportation abroad
• Fish canning.
• Marble.

* A privately owned subsidiary hub port has been established with an international level nearby at Ain Sukhna under the BOT system as a container terminal.

8. East of Port Said Public Free Zone:

It is located on east of Port Said maritime port. Its area is 35.4 million m2. Suez Canal Container Terminal Company is responsible for developing a container terminal according to its contract with the Egyptian Government (under B.O.T system).

9. Shibin El Koum Public Free Zone:

It is located on the Cairo - Alexandria highway, 70 km far from Cairo. The land is owned by Shibin El Kom Company for spinning and textiles.

• Area: 84000 m2 (20 acres) for phase 1 , it will be (48 acres) for the 2^nd phase.
• Primary activities: Spinning and textiles and Medial Components
• Secondary activities (on 21 acres): Complementary industries: ready made garments and food industries.
• Rental value: A ready building (total area about 20000 m2) comprises four floors which can be divided and rented to projects on the following basis:
  • 1st floor:  USD 12.5 /m2
  • 2nd floor: USD 10.5 /m2
  • 3rd floor: USD 8.5 /m2
  • 4th floor:  USD 6.5 /m2

Cost of utilities is reduced 50%.

10. Keft Public Free Zone :

It is one of the most recent public Free Zones in Egypt. It is located in the Keft Industrial Park in Qena, one of the Upper Egypt governorates. Its area is about 907,200m2. The Keft public Free Zone is near to Luxor airport, on the Keft - Qosair Desert Road. The zone specializes in pharmaceutical products and related industries.

Utilities prices and Land rental in Free Zones are competitive

• US $ 12.5/ m² for 1st floor

• US $ 10.5/ m² for 2nd floor

• US $ 8.5 / m² for 3rd floor

• US $ 6.5 / m² for 4th floor

Fees and charges in Free Zones

• Manufacturing or assembling projects pay an annual charge of 1% of the value added to their products.
• Storage projects pay 1% of the value of goods entering the Free Zones.
• Service projects pay  1% of total annual revenue.
• Goods in Transit to specific destinations are exempted from any charges.
• Annual service free shall be paid (once a year) by 0.005 from the investment costs of the project (for each activity of the multi-activity projects) by a minimum 100 $ and a maximum 1000 $ or any other similar hard currencies.
• The authority shall issue this guarantee in return for 0.1 % from its value after the project has presented an insurance policy against theft, damage, and fire with the whole value of the guarantee.

Projects converted to private free zone status:

GAFI may approve changing the status of an inland project to private free zone status if the project:

1. Is in operation.
2. Committed to export not less than 50% of the annual production.

3.       Fulfillment of all the conditions of buildings, fences, security determined by the free zones regulations:

4.       Fences shall around the zone as a whole and not less than 3 meters high.

5.       Only one gate for the project and perhaps another one, which shall remain, closed and be used in emergencies.

6.       Several suitable rooms shall be equipped with facilities for:

7. The representative of the general authority for frees zones & investment that shall be resident in the project.
8. The representative of the customs authority affiliated to the ministry of finance and resident in the project.

9.       Special security rooms shall be equipped and prepared.

10.   In the case of the non-existence of fences, all the windows shall be provided with grills made of iron & nets.

New activities in Egyptian Free Zones:

has allowed new activities that can be carried out by Free Zone projects such as:

• Providing infrastructure and utilities for free zones.
• Management, operating, development and marketing of free zones.
• Development and management of seaports and airports.
• Liquefying natural gas.
• Cultivating the reclaimed land.