To strengthen its foothold as a prime global location for green hydrogen production, Egypt’s government has introduced a draft bill promising significant tax benefits to green hydrogen projects.
The proposed law proposes a tax credit ranging from 33% to 55% on profits from green hydrogen production and its related products, aiming to stimulate foreign investments and domestic production alike.
The draft legislation also offers tax benefits to desalination plants and renewable energy facilities supporting green hydrogen projects. To be eligible for these incentives, projects need to satisfy strict criteria, including securing a minimum of 70% of funding from foreign investors and sourcing at least 20% of components locally.
The draft bill is pending approval from Egypt’s bicameral legislature, after which it would be enacted into law. Given its intricate nature, this process might take a while. Furthermore, to reap these benefits, projects need to become operational within five years.
The tax credit is among several financial incentives in the draft bill, which also provides exemptions from value-added tax (VAT), waivers on company and land registration taxes, and exemptions from customs duty on imported items for green hydrogen derivative production.
By proposing such attractive tax credits, Egypt aims to allure global investors and build a robust green hydrogen industry. The country’s proposed tax credit outpaces those offered by the U.S. and Canada, as well as the planned price premiums auction by the European Union.
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