Company formation in brief

Egyptian legislation is based on a mixture of Islamic, English and French law, and the establishment of Egyptian enterprises and their economic activities are regulated by various laws, in particular, on corporations, on investments, on new companies, as well as on commercial law.

A foreign investor can establish in Egypt enterprises of such organizational and legal forms as:

• Joint Stock Corporation
• Company Limited by Shares
• Branch of Foreign Company

Joint Stock Corporation

Joint Stock Corporation can be incorporated as an open or a closed corporation, and has respectively the following features:

• a minimum capital of a public corporation is LE 500,000 • the minimum capital of a closed company is LE 250,000;
• 10% of the capital of both a public and a private corporation must be paid upon incorporation by depositing these funds with one of the Egyptian banks before the corporation is entered in the Egyptian commercial register;
• a public corporation is allowed to offer its shares in an open subscription, and also has a right to trade its shares on a stock exchange;
• a closed corporation is not allowed to offer its shares for public subscription, and also does not have a right to trade its shares on a stock exchange;
• the minimum number of corporation founders is 3 (there is no maximum for shareholders);
• foreigners can own 100% of the shares in the corporation;
• it is allowed to issue only registered shares with the same value, which cannot be less than LE 5 and cannot exceed LE 1000;
• the liability of a shareholder of the corporation is limited to the value of the shares to which he subscribes, and he is not liable for the debts of the corporation in excess of the market value of these shares;
• the corporation is managed by the Board of Directors, the number of which must be odd and not less than three. Members of the Board of Directors must be shareholders of the corporation, and each of them must own shares in the amount of at least LE 5000;
• if the corporation is incorporated for the purposes of investment law (see below), the directors of the company can be of any nationality; otherwise, the majority of directors on the Board must be Egyptians;
• the corporation is entitled to participate in any permitted business in Egypt, including banking, insurance and fund activities;
• the corporation is obliged to create and maintain a reserve fund of at least 5% of the issued capital.

Company Limited by Shares

A private limited company has the following features:

• a minimum capital of the company is LE 50,000;
• the capital must be paid in full (before the company is entered into the commercial register of companies in Egypt) by depositing funds in one of the banks in Egypt;
• the minimum number of shareholders is 2, and the maximum is 50. Foreigners have the right to own all shares in the capital of the company;
• it is allowed to issue only registered shares of the same value, which cannot be less than LE 100. The company has no right to offer its shares in public sale;
• the company can be managed by a single director, but if the number of shareholders of the company is more than 10, then the company must elect a Board of Directors, the number of which must be odd and not less than three. Members of the Board of Directors are not required to be shareholders of the company;
• at least one of the directors of the company must be an Egyptian citizen;
• the company has the right to participate in any permitted business in Egypt, with the exception of banking, insurance and fund activities.


A foreign company can open its branch in Egypt, which is entitled to conduct commercial, financial and industrial activities subject to a number of restrictions on the conditions imposed by the Egyptian authorities. In practice, operating through a branch in Egypt does not bring significant advantages to a foreign company over operating through a regular local company.

However, the branch has its own organizational advantages:

• a branch can only consist of one foreign manager, but in this case it must have an assistant, an Egyptian citizen;
• The procedures for registering and closing a branch are quite simple compared to ordinary local businesses.

Registration of a branch of a foreign company in Egypt will require permission from the Ministry of Supply and Internal Trade, the ministry in charge of the activities of the branch, and the Directorate General for Free Zones and Investment (GAFI).

Branches must maintain accounting records and file tax returns annually certified by a local auditor.


Taxes in Egypt are conventionally divided into two categories. The first includes direct taxation of income or profits of individuals and legal entities. The second includes indirect taxation of goods, services and events.

All companies are subject to corporate income tax in Egypt at the standard tax rate. A special tax rate applies to oil producing companies, while export companies and industrial (manufacturing) enterprises have their own.

Capital gains resulting from the disposal of the assets of companies are treated as ordinary business profit.

Dividends from foreign sources are taxed in Egypt. However, foreign taxes paid on such dividends are deducted from taxable profit.

Profits derived from transactions with securities listed on the Egyptian Stock Exchange are exempt from taxation.

Nearly all business expenses (including depreciation, interest and duties, bad and bad debts, rents, directors' fees, profit sharing, employee salaries, legal costs, seniority benefits and government social security contributions) are deductible from income before income tax ... Expenses can also be charged to future profit for up to five years.

Branches are taxed on net profits earned in Egypt.

Property tax is calculated based on the rental value of the property.

Fees and technical support fees paid to a foreign company with no branch in Egypt are generally also taxed in Egypt.

All companies and subsidiaries are subject to government development tax in Egypt.

Sales tax applies to most categories of goods and certain types of services (mainly tourism, telecommunications and entertainment). This tax is also levied on goods imported for the purpose of sale.

It should be noted that Egypt's tax treaties provide for the abolition of taxation only on interest and royalties, because there is no tax on dividends in the country.

The Egyptian Investment Law provides that foreign investors are eligible to receive tax and administrative benefits in the following activities:

• development and reclamation of barren and abandoned lands;
• animal husbandry and breeding of poultry and fish;
• industrial development of deposits;
• development of tourism business and maintenance of hotels, motels and boarding houses;
• transportation of products by vans equipped with a cooling system;
• storage of agricultural products, industrial and food products, ensuring their thermal insulation;
• organization of container stations and granaries;
• air transportation and directly related services;
• shipping;
• services related to prospecting and exploration of fields, transportation and supply of gas;
• development of infrastructure, including the supply of drinking water, drainage water, electricity, road construction and the development of communications;
• hospital and medical health centers providing services, one tenth of which is free of charge;
• financial leasing;
• guaranteed subscription to securities;
• capital investment in risk-related enterprises;
• production of computer software;
• creation of projects supported by social development funds.

For those potential investors who are going to develop the sphere of medical or any physiotherapy services in Egypt, it should be borne in mind that this category of services is under the close supervision of the Ministry of Health and is subject to compulsory licensing. In turn, licenses can be issued exclusively for those types of services that have already been previously approved by this ministry. Typically, foreigners wishing to start a business in this area receive permits for a short period, during which the Egyptian Ministry of Health decides whether to issue a permanent license or not.

Egyptian laws allow foreign investors to freely transfer currency to and from Egypt, as well as from one person to another in the country. The only restriction for foreign citizens is a ban on the export of funds from the sale of real estate located in Egypt for five years. The Egyptian pound remains an inconvertible currency and cannot be exported from the country.

Egypt Double Taxation Agreements

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