Foreign Direct Investment Reporting
As the Egyptian government has taken measures to improve the investment climate, including implementing economic reforms, easing regulations, and promoting a more business-friendly environment. These efforts aim to attract foreign investors and stimulate economic growth.
Foreign investment refers to the investment made by individuals, businesses, or governmental agencies from one country into assets or projects located in another country. Such investment plays a crucial role in the global economy. The primary objective of foreign investment is to gain a financial return, acquire assets, or participate in the economic activities of the host country.
Amendments to the Applicable Law
Law No. 141 of 2019 was issued adding a new paragraph No. (14) to Article No. (74) of Investment Law No. 72 of 2017, and this new paragraph granted the General Authority for Investment and Free Zones (GAFI) the right to request all data and information necessary to count the assets of direct and indirect foreign investment from public and private entities – as defined in article No. (126) Bis f the executive regulation No. 2310 of 2017 – for statistical purposes and in accordance with applicable international standards and without prejudice to considerations of national security or the right to privacy, confidentiality of information, and protection of the rights of others.
Importance and purpose of Foreign Direct Investment and Foreign Direct Investment Reporting
In light of the Egypt’s aim to attract foreign investments as it is considered as a momentum for the local economy in improving its ability to grow and interact with the global economy and participate in the international production process, Foreign Direct Investment (FDI) is considered one of the factors to support the movement and sustainability of international trade exchange on a world-wide level.
FDI assist in providing capital and foreign currency; and contributes in transferring the advanced technical techniques and modern management methods between countries.
FDI reporting refers to the process of collecting, analyzing, and disseminating information about the inflow and outflow of the FDI in a particular country. Governments and relevant authorities typically implement FDI reporting mechanisms to track and understand the patterns, trends, and impact of foreign investments on their economies.
Governments gather data on FDI through various sources, including investment promotion agencies, central banks, customs authorities, and relevant regulatory bodies. This data includes information on the amount of investment, sectors involved, countries of origin and destination, and the forms of investment (e.g., mergers and acquisitions, greenfield projects).
Governments typically provide standardized forms and templates for reporting FDI data. These forms may include details such as the investor’s information, investment project details, financial transactions, and other relevant information required for comprehensive reporting.
All companies operating in the Arab Republic of Egypt and containing foreign capital (“Obligated Companies”) are obligated, regardless of the entity of incorporation of those companies, with the exception of research and exploration companies that operate in accordance with joint production agreements with governmental agencies.
Submission and time frame
As per the Prime Minister’s Decree No. 2731 of 2019 adding new articles to the executive regulations No. 2310 of 2017 of the Investment Law in relation to the FDI reporting submission. Article No. (126) Bis (A) of the above-mentioned executive regulation, states that public entities must submits periodic and quarterly reports that include all the information and data available in relation to the companies which include foreign investment, whether such information or data are related to new incorporated companies or adding new amendments to the incorporated companies. Such report must be submitted within thirty (30) days at most from the end of the months of March, June, September and December of each year.
In addition to the above, public entities must submit periodic and quarterly reports that include all the information and data in relation to the international agreements and contracts concluded with foreign investors, within maximum forty-five (45) days from the end of the months of March, June, September, and December of each year.
While the private entities must submit FDI reports within a maximum of thirty (30) days from the date of incorporating new companies or adding new amendments to incorporated companies that includes foreign investment.
In addition to quarterly periodic reports they must be submitted within a maximum of forty-five (45) days from the end of the months of March, June, September, and December of each year, and annual periodic reports that must be submitted within the four (4) months following the end of the fiscal year.
The forms of the FDI reports had been issued by the Prime Minister’s Decree No. (2732) of 2019, that includes all information and data required to be submitted.
In order to facilitate the submission of all the above-mentioned reports from the public and private entities, the Authority issued its guideline on foreign direct investment reports.
Penalties of non-compliance
The Law added a new Article No. (91) Bis, that impose a penalty in case of the non-compliance with the submission of the FDI report on the person responsible for the actual management of the legal entity a monetary penalty not exceeding an amount of EGP 50,000 (only Fifty Thousand Egyptian Pounds) shall be imposed; provided that such monetary penalty is only imposed in case it is proven that the person liable for the management of the Obligated Companies was aware of the non-compliance, which contributed in the occurrence of a crime.