Egypt’s Minister of Finance, Mohamed Maait announced new amendments to custom duties, reducing them by up to 90% on industrial inputs.
On Sunday Maait said that the reduced rates on customs duties will be based on several bands, according to the percentage of the local component in the final product.
The minister explained that the decision includes a package of adjustments to the current customs tariff structure, to encourage an increase in local manufacturing.
This will reduce the customs duties imposed on imported parts, whenever the percentage of local components in the finished product increases. The move will ensure that local factories enjoy a customs reduction on their production requirements imported from abroad.
Maait added that the percentage of local manufacturing will be calculated according to the percentage of the assembly line contribution, determined by a Ministry of Trade and Industry decision for each assembly industry separately.
This will run in addition to the percentage of locally manufactured parts to the total of the complete parts that make up the final product, as determined by the Industrial Development Authority (IDA).
The custom duty cuts will amount to 105% of the value of local manufacturing inputs if the percentage of local manufacturing ranges between 10% and 20%.
These rise to 110% of local input values if the percentage of local manufacturing component ranges between 20% and 30%, and 115% if local manufacturing component ranges between 30 and 40%. The rates amount to 120% of local input value if the percentage of local manufacturing components ranges between 40 and 60%. In case local components exceed 60%, 130% of local manufacturing value will be reduced. However, cuts have a maximum of 90% of the tax category on the final product.
The amendments, which the Egyptian Customs Authority has begun to implement, also aims to increase investments in Egypt, whilst providing new job opportunities. At the same time, the amendments are designed to maximise Egypt’s productive capacities and expand the country’s export base.
Maait added that the amendments include a reduction of over 50% in customs duties on some components relating to Egypt’s furniture, petrochemical industries, and durable electrical appliances sectors.
The reductions also cover customs duties related to mass transit and electric vehicles, as well as components used in charging stations for electric and natural gas vehicles.
The minister added that the amendments impose simple customs duties of 2% of the value or import tax, whichever is lower, on equipment imports to supply vehicles with electricity and components. This will affect those vehicles that are being converted to run on electricity.