L . C . C

Subject: legal report concerning: Customs duties and sales tax for supplies of machinery and utilities that import to the Egyptian market, especially in the following: 1. Customs duties and the sales tax on the machinery and utilities value. 2. Currency for customs payments and sales tax. 3. Terms (time-frames) for customs payment and sales tax, starting from the date of delivery and custom clearance; 4. Taxation of income of creditor's bank (of interest to be paid by borrower as well as export credit insurance). 5. Additional local taxes (governorate Alexandria). Legal report Firstly, the customs duties and the sales tax on the machinery and utilities value: 1. Customs duties on the machines and utilities: Is determined by the value of the customs duties on the machines and utilities, and according to the specific values in the Presidential Decrees: - Decree No. 481 of 2013. - Decree No. 14 of 2009. - Decree No. 93 of 2007. According to these decrees the tariffs value is divided on machines and utilities on several levels: Level I: Machines and utilities completely exempt from customs duties, example: textile yarn machines, sewing machines, textile drying machines. Main office: 81 Osman's building -Mustafa Elnahas St- Nasr city - Cairo - Egypt. Tel: +202 23828815 Mob: +2 01111157717 Email: info@Lcceg.com Fb:www.facebook.com/LegalCrisesConsaltantsLcc www.Lcceg.com Level II: Machines and utilities customs duties value by %2 of the total value (in the invoice price and all shipping expenses) as an example: fuel pumps, agricultural machines, papermaking machines. Level III: Machines and utilities customs duties value by %1 of the total value (in the invoice price and all shipping expenses) as an example: heating and evaporation and sterilization machines, distillation machines, electrical metal coating machines. Level IV: Machines and utilities customs duties value by %41 of the total value (in the invoice price and all shipping expenses) as an example: central centrifugal pumps. Level V: Machines and utilities customs duties value by %21 of the total value (in the invoice price and all shipping expenses) as an example: ovens, electric stoves, chop paper machines. Level VI: Machines and utilities customs duties value by 30% of the total value (in the invoice price and all shipping expenses) as an example: cooking machines. Note: please find attached: decree No. 481 of 2149, decree No. 14 of 2113, decree No. 93 of 2112, (including all customs duties value for all machines allowed into Egypt) in Arabic. 2. The value of the sales tax on machines and utilities coming into the Egyptian market: In accordance with Article No. 9of Law No. 44of 4334about sales tax: The sales tax value on machines and utilities is 10% of the total value (the price in the invoice and shipping expenses). Important note: Russian machines and utilities that export to free zones in Egypt are fully exempt from customs duties and sales tax according to article No. 23 of law No. 8 of 7991 about investment guarantees and incentives. Secondly: Currency for customs payments and sales tax: According to Article 22 of Law No. 66 of 4369 as amended by Law No. 461 of 2111, about Customs duties: the currency of payment of customs duties and sales tax of machines and utilities is the Egyptian Pound and calculated in accordance with the announced price by the Central Bank of Egypt at the day of payment. Main office: 81 Osman's building -Mustafa Elnahas St- Nasr city - Cairo - Egypt. Tel: +202 23828815 Mob: +2 01111157717 Email: info@Lcceg.com Fb:www.facebook.com/LegalCrisesConsaltantsLcc www.Lcceg.com Thirdly: Terms (time-frames) for customs payment and sales tax, starting from the date of delivery and custom clearance; 1. Customs duties: According to Law No. 66 of 4369 bout customs, in all case, must pay customs duties before the exit of machines and utilities from the port during a period of 41 days maximum. 2. Sales Tax: According to the decree of the Ministry of Finance No. 23 of 2111 about the rules of payment of sales tax on machines and utilities, there are three cases are as follows: First case: If this machinery and utilities will be used in the production of non taxable goods, the sales tax shall be as follows: - Half a per cent (0.5%) of the value of the sales tax of these machines and utilities at the temporary release of the competent customs. - The rest of the value of the sales tax of these machines and utilities in seven installments, the first installment will be after three years from the date of the temporary release. Second case: If this machinery and utilities will be used in the production of taxable goods, the sales tax shall be as follows: - Half a per cent (0.5%) of the value of the sales tax of these machines and utilities at the temporary release of the competent customs. - The rest of the value of the sales tax within a period not exceeding three months from the start of production. Third case: If this machinery and utilities will be sold in the local market, you must pay the sales tax for them before they leave the port. Fourthly: Taxation of income of creditor's bank (of interest to be paid by borrower as well as export credit insurance); Interest of export credit insurance: Interest rates vary from a bank to another: For example: 1. The interest calculated by Commercial International Bank in Egypt (CIP) on a letter of credit for import is 1.75% for the duration of credit, until the arrival of the consignment, in addition to one hundred dollars for administrative expenses. Main office: 81 Osman's building -Mustafa Elnahas St- Nasr city - Cairo - Egypt. Tel: +202 23828815 Mob: +2 01111157717 Email: info@Lcceg.com Fb:www.facebook.com/LegalCrisesConsaltantsLcc www.Lcceg.com 2. The interest rate calculated by Qatar National Bank of Egypt (QNB) in the letter of credit for import is 1.25% for three months, and then pays 25% for renewal every three months, in addition to one hundred dollars for administrative expenses. Fifthly: Additional local taxes (governorate Alexandria). 1. In accordance with Article 67 of Law No. 91 of 2005 about Income Tax: the Customs Authority must get 2% of the value of imports of machinery and utilities coming to the Egyptian market for trading as a deposit of income tax that deserve on them. 2. For other additional expenses to be paid for the port of Alexandria is as follows: - Storage flooring expenses. - Unloading expenses. - Security inside the port expenses. These expenses are estimated by the size of the container as follows: - 21 feet container estimated additional expenses about six thousand pounds for every 41 days. - 11 feet container estimated additional expenses about nine thousand pounds for every 41 days. For further information please do not hesitate to contact us. Best Regards, Dr. Ahmed Said Founder & Managing Partner L.C.C Law Firm