Arab Finance: The Egyptian government is considering imposing a 5% customs duty on fully imported electric vehicles (EVs) for the first time, according to six sources, four of whom are government officials who spoke to Asharq Business on condition of anonymity.

Such a move aims at protecting local industry and encouraging investment in clean-vehicle manufacturing.

Fully imported EVs currently benefit from a 0% customs duty and are subject only to Egypt's 14% value-added tax (VAT). However, the state has yet to establish actual production or assembly of EVs.

Local factories currently pay a 2% customs duty on imported production components, in addition to VAT, while fully built vehicles can enter the market duty-free. This makes importing finished vehicles more attractive than establishing local manufacturing or assembly operations.

One government official said the gap has weakened Egypt's ability to attract new investments to the EV sector, as companies may prefer importing finished vehicles rather than incurring the higher costs associated with local production.

This has prompted the government to consider imposing the proposed fees to improve the competitiveness of local production and create an incentive for investors to establish an EV manufacturing industry in Egypt.

Meanwhile, the ministries of finance, investment, and industry are conducting extensive consultations to assess the potential impact of the measure on the automotive market and investment climate, according to a third official.

The study is expected to be finalized and submitted to the Cabinet for a final decision before the end of 2026.

Last May, Prime Minister Mostafa Madbouly and Minister of Finance Ahmed Kouchouk followed up on the government's measures for the transition to EVs and the ministry's efforts to support this initiative.