Prime Ministerial Decree Specifies

On 18 December 2019, Prime Ministerial Decree No. 3099 of 2019 was published in the Official Gazette, regulating the cases in which Egyptian citizenship may be offered to foreigners (the “Decree”).[1] Building on a July 2019 law on the matter, the Decree elaborates on the regulations regarding citizenship by investment, particularly specifying the monetary thresholds for the three main cases wherein the Prime Minister may offer citizenship to foreign applicants who either purchase publicly owned real estate, establish an investment project in Egypt, or make monetary deposits. The Decree also reiterates what has been provided for in the 2019 law regarding the establishment of a unit at the Cabinet that is tasked with examining the applications for citizenship in these cases (the “Unit”). The Decree went into effect on 19 December 2019.

Background

Citizenship by investment, which is a form of economic citizenship, is a legal process through which one could acquire the citizenship of a country with which there has been no prior connections in return for a significant investment into that country’s economy. It typically takes one of two routes: investing in pre-approved real estate or contributing to a government fund or a business. Pioneered by the Caribbean twin-island country of Saint Kitts and Nevis in 1984 just one year after gaining independence from the United Kingdom, citizenship by investment provides a mutually beneficial arrangement to both the citizenship applicants and the countries granting citizenship through this model. To the former, the citizenship-by-investment model usually allows for the acquisition of another citizenship in a relatively quicker timespan than other paths towards citizenship might entail, particularly long-term residence. In addition, it does not usually impose travel or language requirements so long as other specific prerequisites are fulfilled. As for the countries granting citizenship, they increase the contributions into local socioeconomic developments. For example, Saint Kitts and Nevis announced that its citizenship-by-investment program enabled it to sponsor development initiatives in healthcare, education, and infrastructure on the island of Nevis alone that are worth USD 22.6 million; the International Monetary Fund also estimated that in 2014, 14% of the country’s GDP was from its citizenship-by-investment program.[2] Thus, despite the criticism it faces – especially with regards to security concerns, fraud, exclusivity to high net-worth individuals, and its possible use for dodging sanctions in the applicants’ own countries – the global market in citizenship-by-investment programs has been booming, particularly after 2009. It now encompasses countries such as Dominica, Cyprus, Malta, Turkey, Jordan, and Bulgaria.[3] In Egypt, the traditional routes towards citizenship have included descent, long-term residence, and birth within the country. In 2018, Law No. 173 of 2018 (“Law 173/2018”)[4] was published, authorizing the government to grant citizenship to foreign investors. In specific, Law 173/2018 stipulated that the Minister of Interior may grant Egyptian citizenship to “foreign residents-qua-investors” (foreigners investing in Egypt who have deposited at least EGP 7 million or its equivalent in foreign currency in an Egyptian bank), provided they have resided in Egypt for five consecutive years prior to the citizenship application. Then, in July of this year, Law No. 140 of 2019 (“Law 140/2019”)[5] was published, amending the aforementioned rules. To begin with, the ‘foreign residents-qua-investors’ category was removed. In addition, Law 140/2019 provides that the Prime Minister may grant Egyptian citizenship to foreigners who either: (a) purchase publicly owned real estate, (b) establish an investment project in accordance with the Investment Law, or (c) deposit money in foreign currency in the Treasury or the Central Bank of Egypt (“CBE”). Law 140/2019 also stipulates the establishment of the Unit for the examination of citizenship applications as per the aforementioned regulations. The application fees for this kind of citizenship are set by the law at USD 10,000 (or its equivalent in local currency) to be made through an international bank transfer and applicants may request anonymity. Finally, Law 140/2019, which like its predecessor Law 173/2018 sparked criticism and controversy, further stipulates that a prime ministerial decree is to be issued to elaborate on these regulations.[6]

The Decree

• Citizenship-by-Investment: Cases and Thresholds

Law 140/2019 did not specify minimum monetary sums for the granting of citizenship by investment and this is where this month’s Decree contributes to the legislation. As per the Decree, the Prime Minister may, based on the recommendation of the Unit, offer Egyptian citizenship to applicants in the following cases:

1. Purchase of publicly owned real estate at no less than USD 500,000

To qualify for this category, investors must have purchased real estate owned by the state or other public corporate entities worth at least USD 500,000, to be transferred from abroad in accordance with CBE regulations. The Prime Minister is to issue a decree specifying which real estate is available for such purchases within 30 days of the date of issuance of this month’s Decree. In case of the disposal of the property before the completion of five years from the date of its purchase, a sum of USD 250,000 must be made in order to keep the Egyptian citizenship unless the disposal was made to the state without charge.

2. Investments worth no less than USD 400,000 with a capital contribution no less than 40%

Eligibility for this category entails establishing or contributing to an investment project with a sum that is not less than USD 400,000, to be transferred from abroad as per CBE regulations. The investor’s shares cannot be less than 40% of the project’s capital. In cases of the liquidation or termination of the investment project or the disposal of the applicant–investor’s shares prior to the completion of five years from the date of the project’s operation, a sum of USD 250,000 must be made in order to keep the Egyptian citizenship unless the liquidation, termination, or disposal was made to the state without charge.

3. Deposits

Two types of deposits are stipulated in the Decree. Both are to be made via international bank transfers to a special sub-account under the Treasury Single Account at the CBE.

1. Refundable Deposits:

• USD 750,000: refundable after 5 years in local currency, without interest;
• USD 1 million: refundable after 3 years in local currency, without interest.

2. Non-refundable contributions to the Treasury of USD 250,000.

• Citizenship-by-Investment Unit

The Decree simply reiterates what has been already stipulated in Law 140/2019 regarding the Unit in charge of citizenship-by-investment applications at the Cabinet, without further additions. It is worth mentioning that Law 140/2019, on the other hand, includes more procedural regulations related to the Unit’s work, including the timeframes that the process of examining and deciding on citizenship-by-investment applications must abide by.   [1] Prime Ministerial Decree No. 3099/2019 regulating the cases in which Egyptian citizenship may be offered to foreigners, Official Gazette, Issue No. 50 (bis) (c), 18 December 2019. [2] Business Traveller. (2019, August 14). How does citizenship by investment work? Available through this link. [3] Henley, J. (2018, June 2). Citizenship for sale: How tycoons can go shopping for a new passport. Available through The Guardian via this link. Investment Migration Insider. (2018, August 20). A history of citizenship by investment: Infographic. Available through this link. [4] Law No. 173/2018 amending certain provisions of Law No. 89/1960 on the Entry, Residence, and Exit of Foreigners, and Law No. 26/1975 on Egyptian Nationality, Official Gazette, Issue 32 (bis) (b), 14 August 2018. [5] Law No. 140/2019 amending certain provisions of Law No. 89/1960 on the Entry, Residence, and Exit of Foreigners, and Law No. 26/1975 on Egyptian Nationality, Official Gazette, Issue 30 (bis) (b), 30 July 2019. [6] Graff, Y. (2019, August 21). Law amendment granting citizenship to investors sparks controversy in Egypt. Inquiry & Analysis. 1469. Available through The Middle East Media Research Institute via this link.