Egypt Considers 5% Customs Duty on Imported Electric Cars for the First Time

Egypt is on the verge of changing the rules of its electric vehicle market. The government is studying the imposition of a 5% customs duty on fully imported electric cars, marking the first time such a fee would be applied in the country's history, in a move aimed at protecting local industry and attracting new investments in clean vehicle manufacturing, according to six informed sources including four government officials who spoke to Bloomberg Asharq.

Why Now?

The new duty comes at a time when Egypt still has no actual production or assembly of electric vehicles. Fully imported cars currently enjoy a complete customs exemption at 0%, with only a 14% value-added tax applied. This situation has created a clear gap in the market, where ready-made cars enter without any customs burdens, while local factories pay duties on imported components at 2% plus value-added tax.

The gap is significant. Local manufacturers pay more, making imports more attractive than establishing local assembly or production lines. This disparity has reduced the economic viability of investing in local assembly, prompting the government to act on fixing this imbalance through the proposed fee.

Limited Incentives

Investment incentives in Egypt remain limited, according to one official who spoke to the agency, noting that this gap has managed to reduce the market's ability to attract new investments in the electric vehicle sector, with companies preferring to rely on imports rather than bear the cost of local manufacturing. The government hopes that imposing these duties will improve the competitiveness of local manufacturers and encourage them to pour new investments into the country.

The study is still in its early stages, but it sends a clear message to the market. Imported electric cars will lose their competitive edge if these duties are applied, while local factories may see an investment boom in the coming years. The Egyptian market is watching closely — change is coming.