Micro to Medium Enterprises Law in Egypt

The new Law No. 152 of 2020 was issued to regulate the development of Micro, Small and Medium Enterprises (the “Law”). This Law was published in the Egyptian Official Gazette on 15^th July 2020.

The Law mentions the following main types of enterprises and its definitions:

Micro Enterprises:

– Companies or establishments whose annual turnover does not exceed 1 million Egyptian pounds.

– Newly established companies whose paid-up capital does not exceed 50,000 Egyptian pounds.

Small Enterprises:

– Companies or establishments whose annual turnover is more than 1 million Egyptian pounds and does not exceed 50 million Egyptian pounds.

– Newly established industrial companies or facilities whose paid-up capital is more than 50,000 Egyptian pounds and does not exceed 5 million Egyptian pounds.

– Non-industrial companies or facilities whose paid-up capital is more than 50,000 Egyptian pounds and does not exceed 3 million Egyptian pounds.

Medium Enterprises:

– Companies or establishments whose annual turnover is more than 50 million Egyptian pounds and does not exceed 200 million Egyptian pounds.

– Newly established companies or industrial facilities whose paid-up capital is more than 5 million Egyptian pounds and does not exceed 15 million Egyptian pounds.

– Non-industrial companies or facilities whose paid-up capital is more than 3 million Egyptian pounds and does not exceed 5 million Egyptian pounds.

This Law supports and encourages the establishment of more enterprises through providing incentives to a large number of different enterprises, these include enterprises related to agricultural or animal production activity, as well as enterprises that operate in the field of information technology or those involved in renewable energy.

Accordingly, the Law stipulated in Article (24) the following incentives:

– Providing such enterprises deferment to pay the value of connecting utility services, including total or partial exemption from the late interest, also the Law extended more support for such enterprises, by refunding the total value of connecting the utility services or part of it to the enterprise allocated land after the enterprise starts its operation;

– The State shall bear part of the cost needed for the workers technical training;

– Allocating lands for free or in exchange of a nominal amount;

– Refunding not more than half the land value allocated for the enterprise;

– Exempting or reducing the value of necessary guarantees at the time of allocating the enterprise properties and until the activity starts;

– Refunding the participation value in exhibitions or bearing it totally or partially.

The Law also permitted the Micro, Small and Medium Enterprises Development Agency Board to set up monetary incentive programs in accordance with specified criteria and within the limits allocated annually from the State’s General Budget for this purpose. However, it should not exceed three out of ten per thousand (0.3%) of the gross domestic product with a minimum limit of 1.5 billion Egyptian pounds annually, for the purposes of developing enterprises stipulated in Article (23) of this Law and raising the competitive capabilities of such companies.

The executive regulations of the previous Law No. 141 of 2004 is applicable until the executive regulations for this Law is issued within six months from the date of its enforcement (i.e. from 16^th July 2020).

If you are interested to know more about the Development of Micro, Small and Medium Enterprises Law, please send us on lucy@levarilaw.com