Doing Business in Egypt: 2010 Guideline for

Netherlands Companies

Date

August, 2010

Place

Cairo- Egypt

Author(s):

Embassy of the Kingdom of the Netherlands | Economic

Affairs and Development Co-operation Department
T- (202) 7368752
F- (202) 27358736
E- kai-ea@minbuza.nl
http://www.hollandembassy.org.eg

Page 1 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Contents

Introduction
Market Overview
Setting up a Business
Law of Business
- Investment Laws
- Free Zones
- Special Economic Zones
- Investment Zones
Indirect Investment
- Commercial Agents
- Distribution
- Franchising
- Technology Transfer and Licensing Agreements
Import and Trade Regulations
a. Import Tariffs
b. Import Requirements and Documentation
c. Movement Certificate (EUR.1)
d. Packaging, Marking and Labelling
e. Importing Used Machinery and equipment into Egypt
Main Trade
-

Laws and Regulations

Tender Law
Non-Banking Financial Services
Intellectual Property Rights
Labour Law and Employment
Customs
Commercial Register Law
Law No. 114 of 2008
Economic Courts
Dispute Settlement
Arbitration

Page 3 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Introduction

The Doing Business in Egypt: 2010 Guideline is designed to provide Dutch companies
and/or businessmen/women with an overview of the Egyptian market, including general
information on the legal and regulatory environment for conducting business in Egypt.
The Economic Affairs Department of the Embassy of the Kingdom of the Netherlands
strongly recommend that Dutch companies and/or businessmen/women seriously
interested in investing in Egypt or signing contracts with partners/agents/distributors
should seek advice from an appropriate qualified professional, and that such advice
specifically relates to their particular circumstances. The Economic Affairs Department
can provide information on lawyers, accountants and freight forwarding companies in
the market.
A local partner is imperative to successful penetration of the Egyptian market and to
help navigate the complexities of doing business in Egypt. The importance of having a
local partner lies also in the fact that foreign companies cannot bid directly on
government tenders; they must act through local agents. Also, as the market becomes
more sophisticated in Egypt, there is a growing demand for after-sales service requiring
the services of a local agent. In that regard, we always recommend Dutch businesses
to have a strong and reliable local partner with a good network, knowledge of the
business environment and the rules and regulations.
The Economic Affairs team of the Embassy can provide a range of services to Dutch
companies and/or businessmen/women wishing to grow their business in the Egyptian
market. The services include market information, identifying business partners and
providing the support and advice most relevant to your companys specific needs in the
market. Should you need assistance in your search for appropriate partner, you may
send us your request via e-mail: kai-ea@minbuza.nl.
While we make every effort to ensure that the information in this document is accurate,
the Economic Affairs Department of the Embassy of the Kingdom of the Netherlands in
Egypt accepts no responsibility for any errors, omissions or misleading statements.

Page 5 of 19

Market Overview

The Netherlands is Egypts 5th largest EU trading partner and the 10th largest
International trading partner. Dutch exports to Egypt concentrate in sectors such as
machinery and transport equipment, chemical products, food products and life animals,
metal ore, office equipment and automation. The main import products from Egypt are
mineral fuels and agricultural products. The Netherlands is also the fifth largest investor
in Egypt. Main Dutch investors in Egypt include Heineken, Shell, Unilever, Akzo Nobel,
Philips, Farm Frites and GiroNil.
With a population of over 80 million, Egypt is by far the Arab Worlds most populous
nation with a growing economy that has become much more diversified than in the
past. It is a major oil and gas producer, with natural gas production increasing rapidly.
Investment needs in infrastructure remain substantial. In May 2010, the government
endorsed an institutional framework for public-private-partnerships (PPPs).
PPP
projects in the pipeline include building and maintaining hospitals, potable and
wastewater stations, and freeways. Other significant sectors of interest to Netherlands
companies include chemicals, pharmaceuticals, agriculture, water, tourism, renewable
energy, logistics, ICT and consumer goods.
A slowdown in economic activity in Egypt was expected in 2009/2010 due to the global
financial situation. According to the IMF estimates, economic growth fell to 4.5-5.5% in
2008 and 2009 from a 7% average in the past three years, with inflation declining to 812% over the same period. The FDI flows and net exports of goods and services would
most likely decline as markets shrink and export prices fall, leading to a large budget
deficit. However, a large domestic consumer market and potential for development in
terms of the growth of the middle class, home ownership and banking, long-term
growth prospects are undoubtedly positive.
The economic reform programme implemented since July 2004 by the Nazif
government, centred around four main areas: reforming the tax system
(corporate/personal taxes have been cut to a flat rate of 20% and for petroleum
companies to 40.55%), transforming the customs administration and reducing the
average weighted tariff from 9.5% in 2004 to 5.5.% in 2009, improving the business
climate (the WB/IFC Doing Business 2010 report ranked Egypt among the top ten global
reformers for the fourth time in five years) and reforming the monetary and banking
sector.
Although these reforms have developed considerable momentum, red tape remains a
business impediment in Egypt, including a multiplicity of regulations and regulatory
agencies, delays in clearing goods through customs, arbitrary decision-making, high
market entry transaction costs, and a generally unresponsive commercial court system.
In spite of these impediments that pose significant downside risk to doing business in
Egypt; the country still has the potential to be among the emerging markets poised to
offer good returns for foreign investment. The reality of the risk diminishes with the
application of due diligence and thorough market research.

Page 6 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Setting up a Business

There are many potential business structures and commercial vehicles under Egyptian
Law. Investment in Egypt is governed and regulated by Companies Law No. 159 for
1981 (Companies Law), Investment Law No. 8 for 1997 (Investment Law), and
Capital Market Law No. 95 for 1992 (Capital Market Law).
Direct investment in Egypt (except for Free Zone investment) is subject to the general
corporate and commercial system in Egypt; and in certain cases, the entity in question
may benefit from additional investment guarantees and incentives pursuant to the
Investment Law.

Typical Forms of Business Structures in Egypt:sole proprietorship (exclusive to Egyptian nationals)

simple partnership general and limited
limited partnership by shares
limited liability company
joint stock company private or public
In addition to the above, there are other forms of business incorporation associated with
foreign operations such as representation offices, foreign branches and franchising.

The most common legal vehicles used by foreign investors in Egypt are:
limited liability companies
joint stock companies
foreign branch office
representative office
Choosing the correct structure depends on a number of factors, including nationality of
the investors, size of the capital investment and the nature of activities to be
undertaken. A successful entry into Egypt will be determined by the quality of the
information and advice upon which the decision to enter the market is based. Dutch
companies and/or businessmen/women are strongly recommended to seek professional
legal advice before concluding any contracts in Egypt. The Economic Affairs Department
of the Embassy can provide information on lawyers in the market. The Business Laws
are available in English on the website of the General Authority for Investment & Free
Zones (GAFI): http://www.gafinet.org, under Doing Business/Laws & Regulations.

Page 7 of 19

Laws of Business

a. Investment Laws
Investment Law No. 8 of 1997 and Companies Law No. 159 of 1981 and their
amendments are two key laws that regulate the investment environment in Egypt.
Investment Incentives and Guarantees Law 8 of 1997 repealed Investment Law 230 of
1989. It made one authority responsible for investor incentives and guarantees - the
General Authority for Investment and Free Zones (GAFI) and established a onestop
shop for investors at GAFI to facilitate and simplify approval, registration, licensing and
certification for new projects instead of having to go to 25 separate ministries. It also
grouped specified activities that would automatically accrue benefits to investors. It
allows 100% foreign ownership of ventures and guarantees the right to remit income
earned in Egypt and to repatriate capital. Key provisions include: the guarantee against
confiscation, sequestration and nationalisation; the right to own land; the right to
maintain foreign currency bank accounts; freedom from administrative attachment; the
right to repatriate capital and profits; free hiring of Egyptian staff, absence of price
control or restrictions and equal treatment regardless of nationality.
Under Law 8, investments are approved automatically for projects in 16 distinct fields,
effectively creating a positive list. These fields include land reclamation; fish, poultry
and animal production; industry and mining; tourism (covering hotels, motels, tourist
villages and transportation); maritime transportation; refrigerated transportation for
agricultural products and processed food; air transportation and related services;
housing; real estate development; oil production and related services; hospitals and
medical centres that offer 10% of their services free of charge. In April 2000, new
activities were added to the package of incentives to include development of new urban
zones, software design and production of electronics, establishment and management of
technology zones, credit rating, factoring, river transportation activities, management of
industrial projects and utilities, and waste collection and treatment projects. Some
projects still require prior approval from relevant ministries in addition to GAFI,
including investments in Sinai; all military products and related industries; and tobacco
and tobacco products. Law 15 of 1963 prohibits foreign ownership of areas designated
as agricultural lands, except for desert reclamation projects.
The new Unified Tax Law No.91/2005 impacted the investment law tax incentives
provisions as it revoked articles 16, 17, 18, 19, 21, 22, 23-bis, 24, 25 and 26 of the
Investment Guarantees and Incentives Law 8 of 1997. Under the new tax law,
exemptions as prescribed in the said articles shall remain valid for companies and
establishments whose exemption period started before the effective date of the law,
until the end of the period determined. Those companies that did not commence
activities must do so within 3 years in order to avail themselves of those exemptions.
Companies Law 159 of 1981 and its amendments covers investors in any sector not
covered by Law 8 of 1997; including shareholders, joint stock, and limited liability
companies and representative and branch offices. It allows for automatic registration of
Page 8 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

a company upon presentation of the application to the Companies Department and for
acquisition of legal status 15 days after annotation in the Commercial Register.
Law 3 of 1998 amending law 159 provides for the right of petition for denial of
incorporation, removes the restriction that 49% of shareholders must be Egyptian,
allows 100% foreign representation on the board of directors, and redefines accounting
standards.
b. Free Zones
The Investment Law also regulates investment under the free zone system. There are
two types of free zones, public and private. Public free zones are established in specific
locations while private free zones are established exclusively for a specific project or
company and are typically suited for large export-oriented manufacturing projects.
Investors operating inside the Free Zones export more than 50% of their total
production. Among the Free Zone incentives and guarantees are a lifetime exemption
from all taxes and customs (but subject to a duty of 1% of the value of goods entering
the free zone for storage in respect to warehousing projects and 1% of the value of
goods leaving the free zones in respect of manufacturing and assembly projects);
exemption from all import/export regulations; the option to sell a certain percentage of
production domestically if custom duties are paid; and limited exemptions from labour
provisions. To facilitate import/export procedures, Free Zones are usually located
adjacent to sea ports and airports.
c.

Special Economic Zones (SEZ)

The SEZ Law was promulgated in June 2002. It provides for the establishment by
Presidential Decree of special economic zones (each an SEZ) for industrial service or
agricultural activities to be located outside existing urban areas and possibly attached to
a port. The North West Suez Special Economic Zone stretches over 20 square
kilometres is located adjacent to the Sokhna Port (about 45kilometers southeast of Suez
City) near the southern entrance of the Suez Canal. Incentives and Guarantees include
a 5% flat rate on personal income tax; integrated custom administration; tax
administration; dispute settlements; licensing as well as general investors services for
projects incorporated within the zones; 10% tax rate on all activities within the SEZ;
Egyptian certificates of origin for SEZ based exporters, allowing them to make use of
Egypt's international trade agreements.

d. Investment Zones
Investment Zones regime is one of the latest investment schemes that was recently
formulated in 2007 under Law No. 19/2007. Establishment of the investment zones are
allowed across all sectors (i.e. tourism, finance, agriculture, industry and services
projects). Investment zone is run within a well- developed administrative frame in
terms of timing and facilities granted concerning license issuing and dealing with entities
through an integrated one stop-shop affiliated to the General Authority for Investment
and Free Zones (GAFI). The zones do not have any tax privileges, are not restricted to
the industrial sector and private companies can construct these zones following the
same regulatory procedures as industrial zones.

Page 9 of 19

Indirect Investment

a. Commercial Agents
Law no. 120 of 1982 regulates commercial agencies. According to the law, foreign
companies wishing to engage in any type of consulting or other services, or to tender on
government agency bids (except sales to the Ministry of Defence) may do so only
through a registered local agent or intermediary. A foreign company cannot establish in
Egypt a scientific, technical, or consulting office or any similar kind of offices unless it
appoints an Egyptian commercial agent. To work as a commercial agent or
intermediary, the person must be either an Egyptian national or an Egyptian juristic
entity whose name has been registered at the Commercial Agents Record or
Intermediaries Register at the Ministry of Foreign Trade. Registration in the record
requires also the submission of the commercial agency contract showing the nature of
work of the commercial agent, and the responsibilities of the principal and the agent,
the percentage of the agency commission, the conditions for paying it to the agent and
the currency of payment. Registration in the Commercial Agents Record must be
renewed every five years.
b. Distribution
A distributor is a person who sells products in the country on its own account by buying
the products directly from the foreign supplier or from the foreign suppliers agent and
re-sell at a profit. There are no specific laws governing distribution and franchising
agreements. These are governed by the general provisions of the Egyptian Civil Code
and the Commercial Code. There is no need to register as a distributor, as long as the
distributor does not carry out marketing activities on behalf of the foreign supplier. A
foreign producer may appoint both an agent and a distributor, which is common. The
agent would carry out the marketing on behalf of the foreign producer as well as the
importation process, and the distributor(s) would buy from the agent and re-sell for
their own account. There are no nationality restrictions for distributors.
c.

Franchising
Franchising agreements are treated the same way as distributor agreements. In
addition, if a franchise agreement involves a transfer of technology, it must be governed
by Egyptian Law and any disputes in connection with that agreement must be resolved
by the Egyptian courts or by arbitration in Egypt under the Egyptian Arbitration Law No.
27 of 1994.

d. Technology Transfer and Licensing Agreements

The foreign producer or supplier may also enter into a technology transfer or licensing
agreement with an Egyptian enterprise. In such cases, an agent is not required as there
is no marketing of foreign products within the country. Rather, the Egyptian enterprise
that is producing under license from the foreign enterprise would be marketing its own
products. However, the royalties payable to the foreign enterprise are subject to
Egyptian taxation at the rate of 20%, and are to be withheld at the source.

Page 10 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Import and Trade Regulations

Importation for trading purposes and commercial agency activity are both restricted to
Egyptians or business firms wholly owned by Egyptians.
Law no. 121 of 1982 on Importers Register requires that any natural or legal person
wishing to import goods for trading purposes should be registered in the Importers
Register. Importation of materials for manufacturing purposes, and importation of
capital assets such as machines and transport means to be used in the activity of the
business firm and not for trade, can be carried out directly by the concerned business
firm without the involvement of a registered importer.
a. Import Tariffs
In 2004, the Egyptian government reduced the number of ad valorem tariff from 27 to
5. It also dismantled tariff inconsistencies, rationalized national sub-headings above the
six-digit level of the Harmonized System (HS) and eliminated services fees and import
surcharges ranging from 1% to 4%. These and other changes have significantly
reduced request for customs arbitration over the past 5 years. The government has
significantly over the past three years reduced import tariffs on 1,114 items including
foodstuffs, raw materials and intermediate and final goods. In April 2008, tariffs were
completely eliminated on steel rebar, cement (Portland, aluminous, hydraulic and
white), toilet paper and similar paper items. The reforms reduced overall weighted
tariff average from 14.6% to 5.5.%. Tariffs on the majority of goods entering Egypt are
below 15%, except for vehicles, alcohol and tobacco, which are still 40% or higher.
Egypts Customs website: http://www.customs.gov.eg/Default.aspx
b. Import Requirements and Documentation
All goods imported into Egypt, except those destined for the free zones, must be
accompanied by a customs declaration, irrespective of their value. Other documents
required are the original commercial invoice, bill of lading, packing-list, pro-forma
invoice, a form specifying the mode of the payment, delivery order from the carrier in
return for the bill of lading, and if appropriate a content analysis of the commodity. In
certain cases, additional certificates may be required by the customs authorities
including chemical certificates for imports of food additives and other material used in
the food processing industry; quality control certificates for as number of products.
Sanitary certificates are also required for a number of products. Plant and animal
products are subject to inspection by the Agriculture Quarantine Body and the Animal
Quarantine Body.
Ministerial Decree 619/1998 requires that all imported consumer goods to be shipped
directly from the country of origin to Egypt. Decree 619 subsequently was adjusted in
late 1999 to allow the shipment of imported consumer goods from the main branches of
the producing company and its distribution centers. Regulations also were implemented
to facilitate the ability of firms to meet the requirement for a certificate of origin. The
certificate of origin must be authenticated by the Egyptian consulate/embassy in the
country of origin.

Page 11 of 19

c.

Movement Certificate (EUR.1)

The EUR.1 Certificate, which is a document confirming the origin with respect to
preferential treatment, need no further legalisation after entry into force of the
Association Agreement (Article 1 of Ministry of Finance Decree 1859/2004). This is
mainly because Egypt's Customs Authority has been notified of the forms (models) of
the seals of EUR.1 certificates of all EU member states. Should a EUR.1 certificate
name goods with EU origin and another of non-EU origin, in this case the EUR.1
certificate needs to be legalized by the Egyptian Embassy in The Hague.
The EUR.1 is not a mandatory document. It is only required if the importer applies for
preferential treatment. However, this document is important as it may be of financial
advantage. The EUR.1 is to be submitted by the exporter.
Various imported goods are liable to quality control inspection by the General
Organization for Export & Import Control (GOEIC) within one week of the date of
import. The Organization is entitled to examine a random sample of 1% of the total
number of packages in each consignment and up to 2% of the contents of the chosen
packages. The procedures for sampling are laid down in Ministerial Decree 1186/2003.
Advanced clearance centres have been established at the Ports of Alexandria, Port Said,
Suez and Cairo to simplify entry procedures.

d. Packaging, Marking and Labelling

Packed goods must be in packaging that ensures their preservation. The product should
occupy the space of the packaging in full; wooden containers must be accompanied by
an official certificate declaring the containers to be free of insects and pests. For
imported non-food commodities, Decree 396/1994 established that the remaining shelllife should be at least half the original shelf-life.
All foodstuff must be labelled with the following information in Arabic and at least one
other language: name of the producer, country of origin, description of the commodity,
name and address of the importer, production date, expiry date for consumption,
preservation and storing conditions for easily perishable goods, mode of preparation for
goods to be prepared before consumption, net and gross weight, and additives and
preservation included.
Appliances, machinery and equipment must be accompanied by: a manual in Arabic
containing illustrative drawings of the parts; assembly and operating instructions;
maintenance; details of the electric circuitry for electronically operated appliances; and
security precautions.
e. Importing Used Machinery and equipment into Egypt
Law 275/1991 and its amendments outline the regulations concerning the import of
used machinery. This law states that second-hand capital equipment and commodities
including machines, instruments, materials, production requisites and spare parts, may
only be imported after obtaining permission from the General Organization for
Industrialization (GOFI). The capacity of the machinery must not exceed that of the
machinery it replaces or for which prior permission has been obtained from the GOFI. To
obtain GOFIs approval, the applicant should provide full details of the type,
specifications and number of machines required together with a certificate from an
authorized inspection office. This certificate should be legalized (by the relevant
Chamber of Commerce in the Netherlands, the Egyptian Embassy in the Netherlands,
Page 12 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

and finally the Ministry of Foreign Affairs in Egypt) confirming that the machines are in
an acceptable running condition. Approval for second-hand equipment for foreign oil
and gas contractors should be submitted to the relevant Ministry for approval providing
the information detailed above. The relevant Ministry will then inform the customs
authorities through the Ministry of Finance of the status of the equipment. Permission
may then be given for the equipment to be released either on temporary basis (i.e. for
export after termination of the project) or after payment of the appropriate custom
duties.

Page 13 of 19

Main Trade Laws and Regulations

Tender Law
The Tender Law No. 89/1998, and its executive regulations, governs procurement of
goods and services by all Egyptian governmental entities, including governorates and
local authorities. It generally requires administrative units to procure goods and services
through tender or competitive negotiation, although in extraordinary cases procurement
is allowed via direct agreement. Both tender and competitive negotiation requires the
administrative unit to use similar procedures to develop specifications, receive offers,
and evaluate technical offers. The procedures are slightly more complex for a tender,
but the major difference between the two types of procurement is the methodology for
selecting a winner. The procedures for both tender and competitive negotiation require
that only technically acceptable offers be eligible for contract award. The methodology
for selecting the winner of a tender process is to select the lowest priced technically
acceptable offer. The methodology for selecting the winner of a competitive negotiation
is to arrive at the best conditions and lowest price through negotiation with all of the
technically acceptable bidders. The competent authority can chose which procurement
method to use, but once a decision is taken to procure via tender, the procedure cannot
be changed into a competitive negotiation. Law 89/1998 and its executive regulations
establish the conditions and procedures for the use of each type of procurement.
Non-Banking Financial Services
The nonbanking financial sector has witnessed several legislative and institutional
developments. Therefore, it plays a great role in economic growth with regard to
providing various sources of finance and broadening the base of the beneficiaries of the
nonbanking financial service sector.
In the context of implementing Phase Two of the nonbanking financial services sector
reform program, FY2008/2009 has witnessed the endorsement of Law No. 10 of 2009
on organising control over markets and nonbanking financial instruments. The law
states that control over the nonbanking financial services should be unified within the
Egyptian Financial Supervisory Authority (EFSA) to enhance the institutional
development of the nonbanking financial service markets, and improving supervision
over nonbanking financial activities. This new body is to replace the Egyptian
Insurance Supervisory Authority, the Capital Market Authority, and the Egyptian
Mortgage Finance Authority. The new body, which was enacted on July 1, 2009, acts as
the main authority responsible for financial leasing.
Intellectual Property Rights
Intellectual property rights and rules of protection are set out in the Intellectual
Property Rights Law No. 82 of 2002 (IPR Law). The law met certain key TRIPS (TradeRelated Aspects of IPR) requirements, including providing data exclusivity and exclusive
marketing rights. The law also addressed IPR protection in areas such as trademarks,
copyrights, patents, industrial design, integrated circuit layout design and new plant
varieties. The law protects trademarks for a period of ten years. The specified penalty
for violation is a maximum fine of LE20,000 or a prison term of up to two months or
both. Penalty for copyright violations is a fine of LE5,000 10,000 or a prison term of
up to one month or both. Patents are protected for a period of 20 years from the filing
Page 14 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

date while industrial designs and models are protected for renewable periods of 10
years. the penalty for break is a fine of up to LE50,000 or a prison term of up to three
years or both. Semiconductor chip layout designs are also protected under the IPR Law.
Labour Law and Employment
The labour market in Egypt is governed by the Unified Labour Law No. 12 for 2003
(Labour Law), which governs all employees working in Egypt regardless of their
nationality. The new Law comprises 257 articles that address all the legal aspects
regulating the Egyptian labour market. A National Council for Wages has been formed to
determine minimum wages at a level reflective of the cost of living and to balance
between salaries and prices. The Council of wages has set that minimum annual raises
should not be less than 7% of an employees base salary. In addition to the Labour
Law, several ministerial decrees also govern the employment relationship and are
considered complementary to the Labour Law. The Labour Law and all relevant
ministerial decrees aim at increasing private sector involvement and achieving a balance
between employee and employer rights.
Customs
Customs are regulated under Egyptian law No. 66 for the Year 1963. Imports are
subject to custom tariffs at variable rates depending on the product. No custom tariffs
are collected for exports. The competent authority in implementing the law and
regulating the customs field is the Egyptian Customs Authority as a part of the Ministry
of Finance. The Ministry of Finance issues decrees dealing with custom tariffs for each
imported product.
Commercial Register Law
The process of registration whether for agents or companies, is governed by the
Commercial Register Law No. 34 of 1976 and its amendments (98/1996). The basic rule
is that anyone carrying on a commercial activity must register in the Commercial
Register. All registrations must be renewed every 5 years.
Law No. 114 of 2008
The Egyptian Tax Authorities have introduced a new law in 2008 (Law No. 114) that
amends some provisions of existing laws including the Income Tax Law, Investment Law
and Sales Tax Law.
The law specifies that no licenses will be granted to any
establishments for free zone projects in the following sectors: Fertilizer industries; Iron
and Steel; Petroleum manufacturing and Manufacture, liquefaction and transportation of
natural gas.
Economic Courts
Law No. 120 of 2008 concerns the establishment of economic courts specialised in
settling large financial disputes between any independent persons. Each appeal court is
required to form an economic court to address large financial disputes, excepting those
that fall within the jurisdiction of the Council of State.
Dispute Settlement
There is also a separate judicial system for administrative disputes involving
government ministries and agencies. These administrative courts fall within the
jurisdiction of the Council of State, which is empowered to hear actions brought by
persons challenging the validity of presidential decrees and ministerial decisions as well
as disputes involving contracts with the government. The Council of State also has a
Page 15 of 19

Legislative Department that reviews draft legislation and government contracts and
renders legal opinions for the government.
Under Article 175 of the Egyptian constitution, the Supreme Constitutional Court is
vested solely with judicial control over the constitutionality of laws and regulations.
The Constitutional Court also reviews administrative decisions and conflicts of law
between the civil and administrative courts.
Arbitration
Most international contracts provide for some form of international arbitration for the
settlement of contractual disputes. The Court of Cassation has confirmed on a number
of occasions the validity of such arbitration clauses. An Egyptian court will respect an
arbitration clause and stay proceedings brought before it. Arbitration may be conducted
under any set of rules. One of the most popular set of rules is the International
Chamber of Commerce (ICC) rules. Arbitration under the rules of the ICC may be
upheld in Egypt or abroad.
Egypt signed a series of agreements/treaties with the Netherlands and a number of
countries for the encouragement and the reciprocal protection of investment. The
agreement on encouragement and reciprocal protection of investments between the
Government of the Kingdom of the Netherlands and the Government of the Arab
Republic of Egypt was signed on 17 January 1996.
Generally, the agreements/treaties provide that arbitration awards issued in one
country may be enforced in the other if the award is supported by written evidence of
the parties agreement to arbitrate. Then the dispute in question may come under
arbitration in the country where it is to be executed, and the award does not conflict
with public policy. Where no international convention applies, the provisions of law 27 of
1994 must be satisfied for a foreign arbitral award to be enforced.

Page 16 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Bilateral Agreements between Egypt and the Netherlands

Agreement between the Government of the Kingdom of the Netherlands and the
Government of the Arab Republic of Egypt for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income, signed on 21 April
1999.

Agreement on encouragement and reciprocal protection of investments between the

Government of the Kingdom of the Netherlands and the Government of the Arab
Republic of Egypt, signed on 17 January 1996.

Agreement on economic and technical cooperation between the Government of the

Kingdom of the Netherlands and the Government of the Arab Republic of Egypt,
signed on 10 May 1975.

Memorandum of Understanding between the Government of the Kingdom of the

Netherlands and the Government of the Arab Republic of Egypt on the Dutch
Cooperation Programme for Emerging Markets (PSOM) in Egypt 2003-2006, signed
in 2003.

Memorandum

of

Understanding concerning

Trade

Cooperation

between

the

Government of the Kingdom of the Netherlands and the Government of the Arab
Republic of Egypt, signed on 21 April 1999.
-

Memorandum of Understanding between H.E. Mr. Gerrit Ybema, Minister for Foreign
Trade of the Kingdom of the Netherlands and H.E. Eng. Maher Abaza, Minister of
Electricity and Energy of the Arab Republic of Egypt, signed on 20 April 1999.

Protocol of Bilateral Cooperation between the Government of the Kingdom of the

Netherlands and the Government of the Arab Republic of Egypt on Improvement of
Transport and Logistics in North East Egypt, signed on 24 November 1997.

Protocol concerning cooperation between the Ministry of Transport, Public Works

and Water Management of the Kingdom of the Netherlands and the Ministry of
Transport

and Communications

of

the

Arab

Republic of

Egypt

concerning

cooperation in the fields of Communications and Postal Banking, signed on 24

November 1997.
-

Protocol concerning cooperation between the Ministry of Transport, Public Works

and Water Management of the Kingdom of the Netherlands and the Ministry of
Transport and Communications of the Arab Republic of Egypt in the field of RailTransport, signed on 24 November 1997.

Joint Declaration between the Ministry of Transport, Public Works and Water
Management of the Kingdom of the Netherlands and the Ministry of Transport and
Communications of the Arab Republic of Egypt in the field of Transport and
Communications, signed on 14 November 1996.

Page 17 of 19

Preferential Trade Agreements

Egypt is involved globally in several intra and inter-regional trade agreements, both
multilateral and unilateral, including preferential trade agreements with the E.U., the
U.S., Arab, African and European countries, some of which are listed below.
EU - Egypt Association Agreement
The EU/Egypt Association Agreement entered into force on 1 June 2004, after
ratification by the Egyptian Peoples Assembly, the European Union and the European
Union Member States. It provides a framework for the political, economic and social
dimensions of the EU-Egypt partnership, having as its main goals to create a free trade
area over a period of twelve years, which implies reciprocal tariff liberalisation for
industrial and agricultural goods. This agreement is of particular importance for Egypt,
as the European Union is its most important trading partner, its main source of FDI, and
its principal bilateral donor. With the exception of some products (including wool,
cotton, hides and skin, various oils), imports into the EU of Harmonized System (HS)
chapters 25 to 97 originating in Egypt, are allowed free of customs duties. Customs
duties on imports into Egypt originating in the EU are to be phased out over a maximum
period of 15 years, depending on the product and according to four product lists
annexed to the agreement. The agreement also specifies that the EU and Egypt shall
gradually liberalize a greater share of their trade in agricultural and fisheries products.
More information on the Association Agreement can be found on the website of the EU
Delegation in Egypt: http://ec.europa.eu/delegations/egypt.
Agadir Agreement with Jordan, Morocco and Tunisia
Egypt signed a free-trade agreement with Jordan, Morocco and Tunisia on 25 February
2004 for entry into force on 1 January 2006. The so-called Agadir Agreement
committed the parties to removing substantially all tariffs on trade between them by 1
January 2005, and to intensify economic cooperation with regard to standards and
customs procedures. The agreement also covers government procurement, financial
services, contingency measures, intellectual property and dispute settlement. The
conclusion of this agreement is considered to be a major step towards the objective of
creating a Euro-Mediterranean free trade-zone in 2010, as it also contains rules on
bilateral and diagonal cumulation.
Greater Arab Free-Trade Area
The Greater Arab free-trade area (GAFTA) programme, signed on 19 February 1997 to
implement the Agreement on Facilitation and Development of Trade among Arab
Countries, entered into force on 1 January 1998. This agreement is considered as the
backbone of Arab economic integration. It encompasses all the members of the Arab
league, and aims to create a vast Arab free-trade area by 2007 by dismantling customs
tariffs by 10 percentage points annually over a decade. The principal entity responsible
for implementing the programme is the Economic and Social Council of the Arab
League.
Common Market for Eastern and Southern Africa (COMESA)
COMESA aims to deepen and expand the integration process for member countries by
adopting general measures to liberalize trade. These include the removal of all tariff
Page 18 of 19

Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

and non-tariff barriers and the adoption of a common external tariff; free movement of
capital, labour and goods, and the right of establishment in the region; the adoption of
a common set of standards, technical regulations, quality control procedures,
certifications systems and sanitary and phytosanitary regulations; tax harmonization
(including VAT and excise duties), and provisions on industrial cooperation in spheres
such as company law, intellectual property, and investment; implementation of a
harmonized competition policy; and the establishment of a monetary union. The
COMESA has been ratified by the WTO under the Enabling Clause. Egypt became a
member of the 20-nation COMESA in June 1998. COMESAs Common External Tariff
(CET) was to be in place by 2004, with rates of 0%, 5%, 15% and 30% on capital
goods, raw materials, intermediate and final goods respectively.
However, by
December 2004, the CET had not been implemented; members states are conducting
studies to reach a decision on the timing of its implementation. In October 2000, Egypt
together with eight other member states eliminated tariffs on COMESA originating
products.
More information on COMESA can be found on their website:
www.comesa.int.
QIZ (Qualified industrial Zones)
Under the US umbrella, Egypt and Israel signed a trade protocol on 14 December 2004.
The protocol establishes the qualified industrial zones in Egypt. The QIZ agreement
will enable Egyptian textiles and garments to gain free market access to the US market.
In order for a jointly produced Egyptian Israeli product to benefit from duty free
treatment in the US, Egyptian and Israeli companies should together contribute two
thirds of the minimum 35% (at least 11.7% from each side) of local content required
under the QIZ legislation. More information on the QIZ is available on website:
www.qizegypt.gov.eg.

Page 19 of 19