Doing business in Egypt
How quickly can I set up a business?
10-15 days, as long as all setting up requirements are available.
What is the minimum investment needed?
It depends on the legal structure chosen, noting that some activities require minimum capital.
How can I raise finance?
Self-finance. However, debt leverage working capital can be obtained later in addition to expansion finance.
What are the legal requirements for setting up my business?
There are many legal forms of businesses in the Arab Republic of Egypt, but the most common of them are:
Joint stock Company:
The capital of such companies is divided into shares with equal value. The shareholder is not accountable for the company’s debts except within the limit of the shares he subscribes in. It is worth noting that the number of founders should not be less than 3; moreover, the issued capital shall, conditionally, be fully subscribed and each subscriber shall pay at least (10%) of the nominal value of the cash shares upon incorporation, to be increased to (25%) within a period not exceeding 3 months from the date of incorporation, providing the balance of that value (75% of the shares value) shall be settled within a period not exceeding five years from the date of the company’s incorporation. The company shall be managed by at least three BoD members.
Limited Liability Companies:
They comprise two or more partners (not less than 2 and not exceeding 50 partners), each partner shall only be liable for the shares he owns (they are not liable for the Company’s debts), noting that the capital is paid in full at incorporation. The company shall be managed by a manager or managers.
Sole Proprietor company:
Every natural or juridical person may –within the limits of the objectives for which it was established- a corporation- individually incorporate a company in the form of a sole Proprietor company, which shall be of limited liability. The Law stipulates that the minimum limit of the capital of a sole Proprietor company is fifty thousand pounds. The company is deemed under liquidation by force of law if part of the capital of one or more persons is disposed of and the status is not reconciled within 90 days, provided the Authority must be notified; this company is a limited liability company except for in certain cases.
Branch of the Foreign Company:
The Branch acquires the legal form of the parent company, and it is managed by the appointed manager in implementation of decisions of the parent company. It is worth noting that opening a branch for a foreign company requires the existence of a transaction or a contract, the conclusion of which entails the existence of a branch for the foreign company.
Foreign companies may open a representation office, the task of which shall be restricted to studying the Egyptian market, forming the relation network as a prelude to commence investment in Egypt. The representation office is prohibited from conducting any commercial business, and in financing its expenses, it relies on the funding it receives from the head office.
What advice can you give me in regards to payroll and taxation requirements?
An annual tax shall be levied on the net aggregate profits of Juridical persons whatever their objectives are.
Tax shall apply to:
1- Juridical persons residing in Egypt, with respect to all profits whether realized in Egypt or abroad, with exception of the Agency of National Service Projects of the Ministry of Defence.
2- Non-resident juridical persons, with respect to the profits through a permanent establishment in Egypt.
The tax base is rounded to nearest lower ten pounds and it shall be subject to tax at the rate of 22.5% of the net annual taxable profits.
With exception to the rate mentioned in the preceding paragraph, the profits of Suez Canal Authority, the Egyptian General Petroleum Corporation and the Central Bank are subject to tax at the rate of 40%, and the profits of oil and gas exploration and production companies are subject to tax at the rate of 40.55%.
Is there anything else that I should know?
As for investment projects that are established under the umbrella of investment Law, they are granted a special investment incentive, deducting from the net profits that are subject to tax, as per the following:
- A 50% discount off the investment costs of Sector (A). This sector includes the geographic locations which most urgently need development, in accordance with the Investment Map.
- A 30% discount off the investment costs of Sector (B): This sector covers the rest of the areas in the Arab Republic of Egypt, in accordance with the distribution of the investment activities.
Our firms in Egypt
How can Kreston grow your business?
Select your business type:
David Whitmer, of CBIZ MHM in the United States, has written a piece for Taxation Magazine on current global issues […]
Many audits went ‘virtual’ in 2020, either partially or wholly, accelerating a process that’s been underway for a decade or […]