Egypt’s investment authority has tightened approvals for goods produced in free zones to enter the local market, saying it wants to preserve fair competition for domestic companies, the head of the General Authority for Investment and Free Zones (GAFI) told Al Manassa.
GAFI Chair Hossam Heiba said the authority has adopted “strict” controls to limit approvals to what the market needs, noting that projects in free zones are primarily set up to export 100% of their output.
Heiba said allowing up to about 20% of free zone output to be directed to the domestic market while exempt from taxes and customs duties could create an unfair advantage over locally operating firms, prompting the authority to set clearer rules to scale back such approvals.
The Finance Ministry and GAFI are moving to impose a 4–5% tax on products sold locally by free zone companies, Enterprise reported on Tuesday, quoting Deputy Finance Minister Sherif El-Kilany.
According to Enterprise, El-Kilany said companies operating in free zones are exempt from the 22.5% corporate tax and other fees, while domestic investment companies pay taxes in full.
Heiba told Al Manassa that any imposition of new taxes aims to steer companies back towards their core purpose of exporting while protecting competing domestic companies.
He added that taxes are one tool to restore balance, alongside a multistep approval process for selling into the local market that is based primarily on assessing market needs.
Conditions for approving projects in free zones are designed to support local industry by requiring companies to source 30% of production inputs from the domestic market and to employ a specified number of Egyptian workers depending on each project, Heiba said.
On expansion plans, Heiba explained that GAFI is holding preliminary talks with foreign companies about implementing free zone projects in 2026, without disclosing the companies’ names, number, or countries until final agreements are reached.
GAFI requires privately run free zone projects to have issued capital of at least $10 million, investment costs of at least $20 million or the equivalent in other currencies, and a minimum project area of 20,000 square meters, according to the authority’s website.
