Law No. 2 of the Year 2024 Concerning the Incentives of Green Hydrogen and its Derivatives Production Projects = قانون رقم 2 لسنة 2024 بشأن حوافز مشروعات إنتاج الهيدروجين الأخضر ومشتقاته

Abstract

Article: 1 In applying the provisions of this law, the following phrases shall have the meaning assigned thereto: “The competent Minister”: the prime minister “Green hydrogen”: (GH2) the hydrogen produced by the electrolysis of water, using renewable energy. “Green hydrogen derivatives”: the end products that depend in their production on green hydrogen; i.e. green ammonia and green methanol. “Renewable energies”: the natural forms of energy that cannot be depleted, and can be used in producing electricity. “The developer”: the juridical person, who desires to implement a project or more of the green hydrogen and its derivatives production projects. “The project company”: the joint stock company incorporated by the developer as per the legislations applicable at the time of applying the provisions of the present law, for the purpose of implementing a project or more of the green hydrogen and its derivatives production projects. “The project agreements”: the contracts of green hydrogen and its derivatives production projects concluded by the project company with the administrative entities of jurisdiction or the State-owned companies managing public facilities. “Future expansions”: addition of new assets that lead to increasing the productive capacity. Article 2: As an exception to the provisions of the law on the special economic zones promulgated by law no. 83 of the year 2002, and the investment law promulgated by law no. 72 of the year 2017, the provisions of the present law shall apply to the green hydrogen and its derivatives production projects, whose project agreements are concluded within five years as of the date of enforcing the present law. They are represented in the following: 1- Green hydrogen and its derivatives production plants. / 2- Desalination plants that allocate a minimum of 95% of their production to be utilized in producing green hydrogen and its derivatives. / 3- Power stations that generate electricity from renewable energy sources, that allocate a minimum of 95% of their production to feed the green hydrogen and its derivatives production plants and desalination plants, as referred to in items (1) and (2) of the present paragraph. / 4- Projects whose activities are limited to transporting, storing, or distributing green hydrogen and its derivatives, as produced in the Arab Republic of Egypt. / 5- Projects whose activity is directly limited to manufacturing the production requisites or inputs necessary for the plants referred to in item No. (1) of this paragraph, in whose respect a decree shall be issued by the cabinet based on the proposal of the competent minister after taking the opinion of the minister concerned with Electricity & Renewable Energy and the minister of finance. Without prejudice to the provision of the fourth paragraph of article (3) of the present law, the provisions hereof shall apply to the future expansions of the projects indicated in the first paragraph of the present article. Article 3: The developer shall establish the project company. The developer may also establish an operational branch or more for the company, to be concerned with one or more of the company activities, as per the legislations regulating same, and without prejudice to the rules organizing each activity. Green hydrogen and its derivatives production project shall be implemented in accordance with the project agreements, as per the legislations regulating same. Future expansions of this project shall be carried out in accordance with additional agreement to be annexed to the project agreements, after getting the approval of the cabinet, and taking the opinion of the minister concerned with Electricity & Renewable Energy and the entity of jurisdiction over the land. Green hydrogen and its derivatives production projects as well as its future expansions shall enjoy the incentives prescribed by the present law, throughout the duration of the project agreements, provided that the project agreements pertaining to expansion shall be concluded within a period of seven (7) years of the date of commencing the commercial operation of the project. Article 4: Green hydrogen and its derivatives production projects as well as their future expansions prescribed by article (2) of this law shall be granted the following incentives: 1- Cash investment incentive called “green hydrogen incentive” of not less than 33% and not more than 55% of the value of the paid tax, along with the tax return on the income generated from carrying out the project’s activity or its expansions, as the case may be. The Ministry of Finance shall disburse this incentive within 45 days from the end of the deadline specified for submitting the tax return, otherwise, a delay fine shall be due, that is going to be calculated on the basis of the discount rates declared by the Central Bank of Egypt on the first of January preceding the incentive due date. This incentive shall not be deemed a taxable income. The rates of the said incentive and controls of granting same shall be determined by virtue of a decree to be issued by the cabinet, based on a proposal of the competent minister after taking the opinion of the Minister of Finance. / 2- With the exception of passenger vehicles, the tools, equipment, machines, devices, raw materials, supplies, and the necessary means of transportation required for exercising the licensed activity of the green hydrogen and its derivatives production projects, shall be exempted from the Value-Added Tax. / 3- The exports of the green hydrogen and its derivatives production projects shall be subject to (VAT) at the rate of (zero%). The competent minister, after getting the approval of the cabinet, may issue a decree for exempting the green hydrogen and its derivatives production projects from the built-up realties tax due on the real estate actually used in such projects, and from the stamp duty, registration and notarization fees, due on the articles of incorporation of companies and establishments, credit facilities and mortgage contracts related thereto, and land registration contracts necessary for the establishment of green hydrogen and its derivatives production projects, as well as from the customs tax due on all the imports necessary for the establishment of the green hydrogen and its derivatives production projects, with the exception of passenger vehicles.