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Law 152 of 2020 with its many advantages - full guide -

The state of Egypt does its best to exploit human wealth by creating job opportunities for young people. It provides the best possible facilities and reinforcements for the formation of Egyptian projects and companies. Therefore, it issued Law 152 of 2020.

Law 152 of 2020 is one of the primary laws issued on July 15, 2020. It is related to the law for developing micro, small and medium enterprises.

This law includes many facilities set by the state to meet the needs of these projects.

Through this article, you will be able to understand everything related to Law 152 of 2020 and how you can use it to build and develop your project. 

Explanation of Law 152 of 2020

The first article of the Regulations of Law 152 of 2020 gave definitions of well-known names such as what is meant by projects, the competent minister, and others. The first article clarified the definition of each of the: 

Micro projects

These are all projects whose turnover is less than one million pounds per year. As for modern industrial projects, it is less than 50 thousand pounds.

Small Projects

Any project whose turnover ranges from one million to 50 million pounds per year. As for modern industrial projects, it ranges from 50 thousand to 5 million pounds. At the same time, the business volume of non-industrial projects ranges from 50 thousand to 3 million pounds per year.

Medium Projects

These are project whose turnover is not less than 50 million pounds per year and not more than 200 million pounds. Modern industrial projects are no less than 5 million and not more than 15 million. At the same time, non-industrial projects are not less than 3 million and not more than 5 million.

New project

It is a project that has not been more than two years since its establishment.

Summary of Law 152 of 2020

Article 2 of Law 152 of 2020 stipulates the possibility of reducing the minimum and maximum annual capital for each project by no more than 50%, depending on the nature of the project’s activity. It also stipulated the possibility of increasing the annual turnover of projects by no more than 10%.

Article 3-14 referred to the necessity of allocating a headquarters for the project throughout the funding period. The funder can take any appropriate legal measures in case of violation.

When the project owner violates this article, the financier has the right to seize the allocated property and sell it by public auction. Article 14 also confirmed that the real estate contract might not be terminated or replaced without the approval of the financing authority.

Articles 15-18 stipulate regulating how the financing entity fulfils its rights and the exceptions that must be considered, such as faltering projects. For example, Article 18 considered projects declared bankrupt due to financial distress as faltering projects.

Articles 19-21 refer to regulating the right of financing agencies to benefit from real estate allocated for projects as a guarantee. This right does not expire until the end of the financing period.

Article 22 stipulates coordinating the payment method of the public treasury’s dues and its procedures by faltering projects.

Law 152 of 2020 dedicates Articles 28-38 to clarify everything related to incentives for micro, small and medium enterprises.

For example, Articles 23-26 identified projects that can obtain non-tax incentives, such as artificial intelligence, digital transformation, technology, renewable energy, and others.

It also clarified the incentives that can be benefited from and the projects exempted from the incentives. Articles 27-31 relate to projects that benefit from tax incentives and exemptions.

The law also allocated incentives to be granted to companies and establishments that finance and support micro, small and medium enterprises. Articles 32-35 clarified the beneficiaries, methods, and conditions the supporting companies must meet.

Articles 36-38 clarified the cases that cannot enjoy the incentives and the conditions for enjoying the tax incentives.

Article 39-57 clarifies the facilitation and organization of procedures for initiating dealing with financiers by creating branches for the agency, organizing finance management, and dealing with projects. It also specified fees for issuing approvals and licenses.

Articles 58-70 of Law 152 of 2020 are devoted to defining the Micro, Small and Medium Enterprises Development Agency, its resources, rules, details of contracts and guarantees granted to projects, texts of rights and duties of the agency, and the powers of the decisions it issues.

The Small and Medium Enterprises Law referred to regulating transactions with projects in the informal economy. It specifies the fees required to obtain temporary and final licenses.

The law dedicates Articles 93-100 to explaining how to calculate permanent tax treatment and other provisions. 

Penalties of Law 152 of 2020

The law stipulates that the financier who violates any of the articles of the Small and Medium Enterprises Law shall be punished with a fine of no more than 100,000 pounds and no less than 10,000 pounds. 

قانون 152 لسنة 2020
قانون 152 لسنة 2020

Advantages of Law 152 of 2020

As mentioned earlier, Law 152 offers many incredible benefits to projects, including:

  • A significantly reduced tax value for various micro, small and medium enterprises, for example, for small projects, is between 0.50% or 0.75%, according to the business size.
  • The value of the micro-enterprise tax ranges from one thousand to five thousand pounds only.
  • Exemption from the declaration rules of the Income Tax Law.
  • Develop simplified criteria to determine the volume of project work.
  • The taxpayer may be subject to the income tax law in some cases, such as losses.
  • Exempting projects from keeping books and records. 

What are the necessary steps to enjoy the tax benefits of Law 152 of 2020?

• Obtaining proof of location permit.
• Applying for issuing a "project
classification" certificate, which is a certificate to determine whether the project is industrial or non-industrial? Is it micro, small or medium enterprise? Is it modern or already existing? And others.
• Follow up on the request through the inquiry link.

What are the documents required to obtain a project classification certificate?

• A document to prove the license for the location of the project.
• Tax card and commercial register of the financier.
• Social insurance card.
• If the company is already established, a copy of the balance sheet or tax return for the last two years must be submitted.

How do we help your project benefit from the SMEs Law?

Since its establishment, the Egyptian Certified Public Accountants Company has pledged to do its best to upgrade the client’s projects and deliver them to permanent financial security.

We have a team of legal, accounting and auditing experts. We can provide you with the best services, including:

  • Assistance in choosing the type of activity and finalizing the incorporation procedures.
  • Legal representation before the tax authority and government agencies.
  • Issuance of licenses and project classification certificate.
  • Electronic dealing with the tax authority.
  • Applying to the electronic invoice system.
  • Preparing all accounting books and records for the project.
  • Preparing the estimated budget and final accounts.
  • Submit tax returns by the Egyptian tax law.
  • Exploiting all the benefits of Law 152 of 2020.

The ECPA office will surely put your name on the list of successful businessmen. Whatever your project is, with ECPA, it will be much bigger without any financial losses… Contact us now; our experts are waiting to help you!

فريقنا - علاء الديبكي

Member of the Board of Directors for Legal Affairs