CAIRO - 17 September 2022: Egypt is keen to provide many incentives to encourage the integration of the informal economy into the formal economy, and to facilitate procedures for regularizing their situation, within the framework of the directives of President Abdel Fattah El-Sisi, President of the Republic.
In this regard, the Medium, Small and Micro Enterprise Development Law No. 152 of 2020, included incentives and controls to legalize the status of informal economy projects.
The law defines informal economy projects as: medium, small, or micro enterprises that practice their activities without obtaining a building or operating license, or any other license or approval that is necessary to practice the activity, and a decision is issued to determine them by the Prime Minister based on a proposal by the agency.
Article 58 stipulates that the Medium and Small Enterprises Development Agency, or its authorized public legal persons, shall issue temporary licenses for projects operating in the informal economy that conduct their activities without a license at the time of the provisions of the law, and apply for this license to adjust their status in accordance with the provisions of this chapter. The term of the temporary license shall not exceed five years.
According to Article 73 of the Enterprise Development Law, temporary licensing of projects affiliated with the informal economy shall have all the legal effects that licenses and approvals entail in accordance with the relevant legislation.
The competent minister may, upon the proposal of the agency’s board of directors, specify activities to which the provisions of this chapter do not apply to informal economy projects when their nature poses serious risks to security, health, safety or the environment, or if their transfer to the formal sector conflicts with the public interest.
Article 75 stipulates that the agency, in accordance with the criteria it sets, may request the authorities with jurisdiction to dispose free of charge or for a nominal consideration in real estate owned by the state or other public legal persons by selling, leasing, leasing ending with ownership, selling the usufruct right, or the usufruct licensing system.
According to the text of Article 76, if the project does not reconcile its conditions during the period of validity of the temporary license and does not provide acceptable justifications for this, the authority with jurisdiction, after the approval of the Agency, has the right to cancel the allocation contracts concluded in accordance with the provisions of Article (75) of this law, and the state authorities have the right to recover the real estate in accordance with the provisions of Article 76.
Article 80 stipulates that criminal lawsuits filed against informal economy projects in relation to crimes contained in the relevant legislation related to the regularization of the status of these projects shall be suspended immediately after obtaining the temporary license in accordance with the provisions of this chapter.
A certificate of reconciling the situation shall be issued by the executive head of the agency in accordance with the controls and procedures determined by the executive regulations of this law, without being bound by any other laws.
In accordance with Article 28, a customs tax of a uniform category of (2%) of the value shall be collected on all the machines, equipment and devices that the projects import, with the exception of passenger cars, as of the date of enforcement of this law and in accordance with the controls and procedures issued by a decision of the Minister of Finance after Presentation to the board of directors.
The executive regulations of the Small, Medium and Micro Enterprise Development Law specified the categories of fees for obtaining a temporary license to reconcile the situation for informal economy projects, and divided them into two types; projects that do not have a statement of the annual turnover of the project, and projects that have a statement of the annual turnover of the project.
According to the executive regulations of the Small, Medium and Micro Enterprise Development Law, for projects that do not have a statement of the annual turnover of the project, their fee categories are as follows:
For medium projects, industrial projects whose paid or invested capital is more than 12 million pounds and does not exceed 15 million pounds, their licensing fees are 10,000 pounds. And projects whose paid or invested capital is more than 10 million pounds and does not exceed 12 million pounds for projects where the value of the paid or invested capital is 5 million pounds and does not exceed 10 million pounds, the licensing fee is 6000 pounds.
The executive regulations of the Small, Medium and Micro Enterprise Development Law dealt with determining the value of the temporary license fee to reconcile the situation for projects that have a statement of the annual turnover, as follows:
For medium projects, industrial projects whose annual turnover is more than 150 million pounds and does not exceed 200 million pounds, their licensing fees are 10,000 pounds. While projects whose annual turnover is more than 100 million pounds and does not exceed 150 million pounds, their licensing fees are 7000 pounds. And for projects that have an annual turnover of 50 million pounds and does not exceed 100 million pounds, the licensing fees are 6000 pounds.
As for non-industrial medium projects, projects whose annual turnover is more than 150 million pounds and does not exceed 200 million pounds, the value of their licensing fees is 6000 pounds, and projects whose annual turnover is 50 million pounds and does not exceed 150 million pounds, are The fee is 5000 pounds.
As for small projects, industrial projects that have an annual turnover of more than 25 million pounds, and less than 50 million pounds, their licensing fees are 5000 pounds, and projects that have an annual turnover of more than 10 million pounds and not exceeding 25 million pounds, the value of which is Its licensing fees are 3000 pounds, and projects that have an annual turnover of one million pounds and not exceeding 10 million pounds, their licensing fees are 2500 pounds.
As for small non-industrial projects, projects that have an annual turnover of more than 25 million pounds and less than 50 million pounds, the value of their licensing fees is 3000 pounds, and projects that have an annual turnover of more than 10 million pounds and not exceeding 25 million pounds. The value of its licensing fees is 2000 pounds, and for projects that have an annual turnover of one million pounds and does not exceed 10 million pounds, the value of their licensing fees is 1500 pounds.
As for micro projects, projects that have an annual turnover of less than one million pounds, the value of their licensing fees is 1,000 pounds, and projects whose annual business volume does not exceed 500,000 pounds, the value of their licensing fees is 500 pounds.
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