Egypt is considering a 30% reduction in customs duties for the automotive and electrical appliance industries

SadaNews - Egypt is considering reducing customs duties on between 60 and 70 types of essential raw materials related to the manufacturing of automobiles and electrical appliances, with reductions ranging from 20% to 30%, in contrast to the plan to impose or increase tariffs on fully manufactured goods of these same products, especially those coming from China, as part of a strategy aimed at supporting local industry, according to a government official who spoke to "Shorouk" on condition of anonymity.

The official clarified that ongoing studies include reducing customs duties on other categories of industrial production inputs from 10% to a range between 2% and 5%, with the application of different tax brackets based on the nature of each item, which contributes to lowering the cost of local manufacturing and increasing the competitiveness of Egyptian products.

He indicated that this step will coincide with the imposition of customs duties on imported electric vehicles for the first time, alongside the imposition or increase of tariffs on some fully manufactured technological products imported from abroad.

The official attributed this approach to the fact that a large portion of the production inputs is currently subject to the same customs category imposed on imported final products, which represents a "tax distortion" that the government is working to correct by reducing duties on production inputs and applying or raising them on imported final products.

Free Trade Agreements

According to the official who spoke with "Shorouk", the modification of the customs tariff will not include the free trade agreements that Egypt is bound by, foremost among them the partnership agreement with the European Union and the "Agadir" agreement.

The partnership agreement with the European Union stipulates a gradual and reciprocal exemption from tariffs on industrial goods between the two sides, allowing most European products to enter the Egyptian market at low or zero tariffs, in exchange for facilitating the access of Egyptian exports to European markets.

As for the Agadir agreement, it includes Egypt, Morocco, Tunisia, and Jordan, aiming to create a free trade area among the four countries, with the adoption of cumulative rules of origin that allow for the mutual production inputs to be considered as domestic products, facilitating trade movement and enhancing industrial integration.

Timing of Implementation

Regarding the timing of the implementation of the amendments, the official clarified that it is scheduled to send the draft amendment of the customs tariff from the Ministry of Finance to the Council of Ministers during February, paving the way for its presentation to Parliament in March.

Amending the customs duties in Egypt requires legislative changes, necessitating approval from the House of Representatives by majority vote, followed by the ratification of the President of the Republic before it comes into force.