Technology zones according to Law 72 of 2017

In pursuit of encouraging investment, promoting sustainable development, and creating a legislative climate compatible with information and communication technology, the Egyptian legislator enacted Investment Law No. 72 of 2017, which established, among the investment systems, “Technological Zones System.”

The importance of technological zones lies in their ability to combine a tailored legislative regime, investment incentives, specialized infrastructure, and a business environment focused on technology and development, making them one of the most important modern forms of investment.

This article addresses:

1. The concept of Technological Zones under Law No. 72 of 2017 and its Executive Regulations;
2. Objectives of Technological Zones;
3. Incorporating companies inside Technological Zones;
4. Preparing investment feasibility studies for projects inside Technological Zones.

The concept of Technological Zones under Law No. 72 of 2017 and its Executive Regulations

Investment Law No. 72 of 2017 stated that the investment system of Egypt operates through several systems, including the Technological Zones System.

Article 32 of the Law (titled “Investment System in Technological Zones”) provides that:

“upon the proposal of the Board of Directors of the General Authority for Investment and Free Zones (GAFI) and at the request of the competent Minister for Communications and Information Technology, shall license the establishment of technology zones in the field of information and communications technology, including industrial activities, electronics design and development, data centers, outsourcing activities, software development, technological education, and other related or complementary activities.”

The Article also provides that projects established in such zones shall enjoy exemptions from certain taxes and customs duties on tools, equipment, and machinery necessary to operate within the technological zones.

The Law defines an investment zone (of which technological zones are a part of) as “a geographically delimited area allocated for one or more specific investment activities and other complementary activities.”

The Executive Regulations specify operating requirements and management methods for these zones.

Objectives of Technological Zones

Technological zones advance the investment policy objectives set out in Article 2 of Law No. 72 of 2017. They raise economic growth, increase domestic production, create jobs, support exports, and strengthen competitiveness.

From the Technological Zones Regime, one can draw the following specific objectives:

1. Strengthen the information and communication technology sector.
2. Create a modern, attractive investment environment.
3. Increase employment and localize technology.
4. Restructure local production and exports.
5. Stimulate innovation and technological development.
6. Exploit specialized infrastructure and industrial clustering.

Thus, the Technological Zones system in Law No. 72 of 2017 is more than a land allocation; it is a comprehensive system designed to steer the economy toward technology and innovation and to attract investment in that sector.

Incorporating companies inside Technological Zones

Incorporating a company within the Technological Zones requires several steps and requirements, summarized as follows:

Licensing the Technological Zone itself

Under Article 32 of the Law, the Prime Minister issues a license to establish a Technology Zone based on the proposal of the Board of Directors of GAFI and upon a request from the competent Minister for communications and information technology.

The license specifies permitted activities, e.g., information and communication technology manufacturing, electronics design, manufacturing, and development, data centers, outsourcing, software development, technological education, and other related and complementary activities.

Therefore, a company intending to operate in a Technological Zone must carry out an activity licensed for that specific zone.

Obtaining the necessary permits and licenses for the company

The company or project must submit an application to the competent authority within the zone to obtain approval to operate inside its boundaries, in accordance with the rules set by the Board of Directors of the zone.

The license must specify the purposes for which it is granted and its period of validity.

Incentives and special advantages inside the zone

Key benefits for projects in Technological Zones include:

• All tools, equipment, and machinery necessary for carrying out the licensed activity in projects located within technological zones are exempt from taxes and customs duties, in accordance with the procedures outlined in the executive regulations.
• Projects established within technological zones enjoy the special incentives stipulated in Article 11 of the law, which include, depending on the sector in which the project operates, deductions from investment costs, exemption from stamp duty, and other benefits.
• These projects are subject to the provisions of the first and second chapters of the Investment Law, which entitle them to investment guarantees and general principles.

Company/project formation inside the zone

The general provisions for company incorporation under the Companies Law and other relevant legislation apply to the incorporation of companies within these zones, taking into consideration the facilitations provided under the Investment Law. For example, a company or project may be incorporated within these activities, and once it obtains the necessary approvals, it can set up its location within the zone.

Operational and administrative framework for the zone

Each Technological Zone shall have a Board of Directors appointed by a decision of the competent minister (in cooperation between the Minister of Communications and the Minister of Investment). The Board sets operational standards, approves projects inside the zone, and publishes annual disclosures about the assets of its members.

Preparing investment feasibility studies for projects inside Technological Zones

When considering the establishment of a project within a technological zone, it is essential to prepare a comprehensive investment feasibility study that meets the requirements of both the investor and the competent authorities.

This is necessary to ensure the suitability of the project for the activities of the zone, to benefit from the available incentives, and to secure profitability and sustainability within a specialized technological environment. Accordingly, here are the key components of the feasibility study and how to address them within this framework:

1- Project idea analysis and activity classification

Confirm whether the activity qualifies under the Technological Zones categories (software, electronics design, data centers, tech outsourcing, technological education) as stated in the Law.

Verify eligibility of activity for zone incentives and inclusion in approved classifications.

2- Technical feasibility

Identify the site within the zone, construction requirements, allocated spaces, and required infrastructure (communications, energy, cooling for data centers if needed).

Select equipment and technical devices, noting possible customs or tax exemptions under the Law.

Estimate human and technical staffing needs (software engineers, network technicians, data center operators, etc.).

Establish a timeline from incorporation to commercial operation.

3- Financial and economic analysis

Estimate total investment costs (capital, equipment, infrastructure, initial operating costs).

Project expected revenues (software services, outsourcing fees, data center income).

Prepare cash-flow forecasts, internal rate of return, and payback period.

Factor in incentives (tax-deductible eligible expenses, customs exemptions) to lower effective costs.

4- Market and demand study

Analyzing the local and international markets for the technology, software, or services that the project will provide.

Identifying competitors inside and outside the zone, assessing their strengths and weaknesses, and determining the competitive advantage of the project.

Setting a marketing and promotion plan and identifying potential partnerships, especially where startups or data centers require collaboration.

Forecasting export potential, where the activity allows it, and assessing how the project can benefit from international connectivity, governance and data centers requirements.

5- Institutional and managerial study

Decide the company form (joint stock, limited liability) according to the Investment Law.

Design the administrative and technical organizational structure, workforce planning, and training programs (especially since information technology and development require skilled talent).

Complying with the laws and regulatory requirements within the technological zone, as well as meeting the disclosure and governance obligations imposed by the Board of Directors of the zone.

6- Environmental and risk assessment

Assessing the project’s environmental impact—particularly if it involves electronics assembly or data centers—and complying with environmental laws or any requirements related to energy, cooling, noise, and thermal dissipation.

Analyzing technological risks, including power or internet outages, cybersecurity risks, competitive pressures, or technological shifts.

Preparing an emergency and risk-management plan.

7- Implementation plan and timeline

Setting a timeline for establishing the project — including licensing, construction, equipment, and operations.

Defining the work phases and what is expected to be completed in each phase, along with performance indicators.

Determining the date for commencing commercial operations and linking it to revenue generation.

Preparing information on expected outputs, such as the number of employees, users or clients, operational capacity, and other relevant metrics.

8- Compliance and post-operation monitoring inside the zone

After commencing operations, the project must comply with the regulations of the Board of Directors of the zone, including submitting reports, meeting required standards, and adhering to the granted license.

The project should also make full use of the advantages offered under the Investment Law, while ensuring annual performance follow-up and preparing reports such as financial disclosures and impact assessments.

A plan for expansion or upgrading is essential, as the technological environment evolves quickly and sustaining return on investment requires continuous innovation.