Egypt is doing much to attract private investment from both domestic and foreign investors as the country aims to rejuvenate its economy and push forward a number of major development projects. As a high-profile conference approaches, to be held in the luxury resort of Sharm El Sheikh with the aim of attracting high volumes of international investment, the country has decided to cut the individual and corporate top rate of tax.
This measure is being taken in order to create a more attractive environment for high-value investments. Both corporate entities and individuals will see the top rate of tax cut down to 22.5% from its former level of 25%. The decision has also been taken to abolish Egypt’s "Millionaire’s Tax," which previously saw an extra 5% levied on incomes of over one million Egyptian pounds per annum.
Angus Blair, president of the Signet Institute, an economic think tank based in Cairo, believes this move to be a well-judged one for Egypt’s drive to attract foreign funds. "This definitely makes Egypt more attractive to foreign investors," Blair said, calling the earlier decision to increase the tax rate "a mistake."
"It was not the appropriate time," Blair said of the decision to increase the top rate of tax which was taken just last year. "Egypt," he concluded, "is now more investor-friendly than last week."
The upcoming conference is to be attended by a number of prominent figures in the international investment world, including the executives of many major companies from the West as well as the Gulf region. Also in attendance will be International Monetary Fund head Christine Lagarde, US Secretary of State John Kerry, and other important dignitaries. Egyptian officials have claimed that the event will mark Egypt’s return to prominence in the list of cross-border investment destinations.
Egypt has certainly occupied a prime position on this list in the past, thanks to an exceptionally strong tourist trade driven by the combination of sunny beaches and global fascination with the nation’s ancient history. However, first the financial crisis and later political instability hit the country hard. Tourism plummeted drastically, and foreign direct investment followed suit. From US$13 billion at the pre-crisis peak of 2007, foreign investment fell to just $4.2 billion by last year. Economic recovery is a top priority for the current government, with large-scale initiatives designed to bring this goal about. Ashraf Salman, Egyptian investment minister, forecasts FDI to pick up to US$8 billion by the end of this year on the back of these efforts. Creating an attractive environment for foreign investment is being treated as a key strategy in driving such growth.
The conference is set to present investors with around US$35 billion worth of investment opportunities. These will represent the chance to invest in a range of sectors including property, infrastructure and energy. Opportunities related to the proposed extension of the Suez Canal, as well as reportedly projects relating to the construction of an as-yet-unnamed new Capital City.