New Draft Customs Law in Egypt
A new customs law has been proposed by the Egyptian Parliament that could potentially repeal Customs Law No.66/1963. If passed, it will centralize customs monitoring, procedures, taxation, fees collection, and enforcement within the Customs Authority; minimizing bureaucracy. Another important development is that the Customs Authority would analyze goods for violations of intellectual property rights (IPR). The Customs Authority would also be responsible for approving new activity in free zones, special economic regions, and free markets. The Minister of Finance deemed this law to be “a leap in legislative thought”.
As of now, all goods entering Egypt are subject to the customs tax; however, in the draft law, exported goods will only be subject to taxes imposed by other, complementary legislation. Crucially for our clients, a new electronic pre-clearance system would allow the clearance of goods before their physical arrival at Egyptian ports of entry. The new law would permit customs taxes to be paid in installments for heavy machinery, equipment, tools, and production lines that have not been subject to any other tax exemptions or reductions. Only three categories of imported commercial goods will be exempted from the customs tax: Ministry of Defense imports, the presidency’s imports, and Administrative Control Authority imports. The proposed law will grant the Customs Authority ultimate control over exemptions and tax reductions, reducing the confusion of overlapping exemptions issued by different government bodies.
It should be noted that while almost all personal goods will continue to be exempted from customs taxes under the proposed legislation, such an exemption precludes their later sale within the Egyptian territory for a five-year period. Intermediary products are temporarily exempted from the customs tax. The new law is engineered to protect local products; consequently, companies that import foreign material to be used in the production of local goods will receive a customs tax refund. The Minister of Finance will issue the Executory Regulations within six months of the law’s passage.