Egypt’s President approves amendments to custom tax law

CAIRO – 11 September 2020: Egyptian President Abdel Fattah El Sisi approved amendments to custom tax law no. 419 for 2018, which defines the value of custom taxes on imported equipment required for vehicle charging stations and natural gas fueling stations.

According to article no. 1 of the law, two percent of the value or the import duty of these equipment, which is less. The law also includes components used to convert vehicles to work with electricity only or natural gas, environment monitoring equipment as well as renewable energy equipment.

Article no. 2 of the law, stipulates that in case the percentage of local manufacturing reaches 10 percent or more, the imported foreign parts are subject to the import tax class prescribed on the final and fully-manufactured product.

While touring a housing project in July, President Sisi was quoted as saying that “new cars will not be licensed until they are converted to natural gas.” The president’s remarks were then elaborated by the industry minister so that people know what group of vehicles are mainly targeted by the decision.

Sisi’s remarks mainly addressed car owners whose vehicles are 20 years old or even older. Those owners can sell their old cars to the government to be dismantled for spare parts as a deposit for a new car with no interest payments, in accordance with the President’s directives.

Through an inventory conducted in coordination with the Ministry of Interior, there are 1.8 million vehicles considered under the initiative, which is set to be implemented over the course of two to five years, at a cost of LE 320 billion ($20 billion), A Cabinet’s statement quoted Minister of Industry Nevin Game’ as saying.

Over three years, there is a plan to convert 147,000 vehicles to natural gas instead of gasoline, in coordination with the Ministry of Petroleum, at a cost of LE 1.2 billion ($75.15 million).

However, converting 240,000 microbus vehicles running on diesel was found to be hard, the minister said, adding that these vehicles will be replaced with gas-powered ones, through a finance program that extends over four years at a cost of LE 53 billion ($3.3 billion).

The ministry also aims at building 366 natural gas stations nationwide to fuel the gas-powered vehicles.

New cars?

New cars are also targeted in the plan. According to the statement, the minister said a new initiative will be launched to “encourage” car owners to convert their cars to run with bi-fuel system (gasoline and natural gas) in case they are qualified to work with gas.

However, this initiative will require that these cars are locally manufactured, at least to some extent prescribed by the Industry Ministry.

Concerning cars that were manufactured less than 20 years ago and whose engine efficiency has not decreased by more than 25 percent over time, Game’ added in a separate interview.