Ta b l e o f Co n t e n t s.

01 . 02. 0 3. 10 . 1 1 . 1 2.
Disclaimer Forward Egyptian Tax System Stamp Duty Tax Other Tax Matters Free Zone Tax
page 4 page 5 page 7 page 18 page 19 page 20

0 4. 05. 0 6. 1 3.
Corporate Income Tax Tax on Dividends Capital Gain Tax Company Formation in
page 8 page 10 page 11 Egypt
page 22

0 7. 08. 0 9.
Salary Income Tax Withholding Tax Value Added Tax “VAT”
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Di s c la im e r. For wa r d.

This document contains summarized information to provide an overview of the tax system in In the last three years Egypt has solidified its position as one of the biggest markets and economies in
Egypt. Therefore it is intended for general guidance only, and not to be substituted for detailed the Middle East and the Arab world, due to its developed economic, market and social structures and
research or the exercise of professional judgment. wide labor resources.

The information in this document is completed, to the best of our knowledge, based on the most In order to enhance economic performance and restore growth, the government has introduced a broad
recent updates on local tax laws and regulations as of July 2018. fiscal reform program. Firstly, the Value Added Tax (VAT) system was introduced as a replacement for
the General Sales Tax Law, along with an updated version of the Investment Law. Egyptian Companies
Please contact Andersen Tax & Legal in Egypt should you need further details for a particular case. Law was also amended in order to attract new investments to Egypt, and this was supported by lower
Andersen Tax & Legal in Egypt, or any other member firm of Andersen Global, does not accept any customs duties, removal of exchange control restrictions and the floating of the Egyptian pound (EGP).
responsibility for loss or damages to any person/organization acting or refraining from action as a
result of any information in this document. Although many of these changes aim to simplify the way in which commercial activity is carried out
in the country, staying updated with these modifications and comprehending their full impact can be
Visit our website to find out more: www.andersentaxlegal.com.eg quite a daunting task, particularly since legal and financial mistakes can often have dire repercussions
on those who make them. It is therefore necessary to emphasize the importance of working with
trusted and experienced legal and tax firms for any specific issues you may have within Egypt.

This guide therefore aims to provide an overview of the Egyptian taxation system, as well as the most
common legal forms, which a new company can take. For any legal or tax consultations, or to request
a copy of our book “Egypt Land of Opportunities 2018” please contact us on
info@AndersenTaxLegal.com.eg
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Country Profile
Egyptian Tax
Area -
Syste m .
The National Day -
Total: 1,001,450 sq. km 23rd of July
Land: 995,450 sq. km
Water: 6,000 sq. km Population -
106,207,983
Land Boundaries - A country’s taxation regime can significantly Today, Egypt offers investors competitive tax
Language - impact the amount of investment made within rates, with many projects even qualifying for tax
Total: 2,612 km
Arabic is the official language, however, it, particularly from foreign investors who breaks for their equipment and land. Further-
Border countries: Gaza Strip 13 km, Israel 208
English and French are commonly used in the may find it more justifiable to do business in more, Egypt has signed double taxation treaties
km, Libya 1,115 km, Sudan 1,276 km
commercial fields. their home towns if tax regimes in a particular with a large number of countries, making the
country are comparatively higher than their country all the more appealing as a destination
Climate - Telephone code of Cairo - Giza - domestic tax rates. It is generally accepted that
Moderate climate throughout the year (Summer for commercial activity. Although the country
00202 high taxes have an adverse effect on industry
°35-°25, Winter -°15 °25 C). does still tax personal income, unlike some of
level investment; in particular, high corporate its neighbors, new laws have decreased taxation
Cities and Ports - taxes reduce investment by increasing the user for the top band of income from 25% to 22.5%,
Natural Resources - The biggest cities are Greater Cairo, Zagazig, cost of capital. which is significantly lower than countries such
Petroleum, natural gas, iron, ore, phosphates, Alexandria, Port Said, Al Mahala Al Kubra, Luxor,
as the UK (can reach 45%) and Sweden (can
manganese, limestone, gypsum, talc, asbestos, Mansoura, Tanta, Asyut, and Menya. With this in mind, there has been a surge to do
reach 36%).
lead, rare earth elements, zinc business in the Middle East in the last decade,
Administrative Division - where countries offer tax breaks and incentives
The New Investment Law which was introduced
Government Structure - The Republic is administratively divided into which are unparalleled in Europe, the USA and
Canada. This guide will focus particularly on in 2017 also provides a number of incentives
Republic 27 governorates. The governorates are either
taxation in Egypt; however comparisons may be and tax deductions particularly for greenfield in-
completely urban, or a blend of urban and rural
made with other countries for ease of reference. vestments.
Currency - areas.
Egyptian Pound EGP
Ports - Egypt introduced its first modern tax laws in 1939
Time Zone - There are 43 ports in Egypt due to the extension which imposed taxes on business and labour
(UTC + 2) of the coastlines to the north and east, and the gains (Law No. 14 of 1939) and on agricultural
most important ones are Alexandria, Damietta, land (Law No. 113 of 1939). The current structure
Establishment - Suez, Port Said and Safaga. of the Egyptian tax system includes both direct
3200 BC taxes and indirect taxes, as follows:
Official Workdays -
Egyptian Tax System
Geographic Importance - Official workdays in the ministries, government
Egypt controls the Sinai Peninsula, it is the departments and general authorities and local
land bridge between Africa and remainder of administrative units are Sunday to Thursday
Eastern Hemisphere; controls the Suez Canal, leaving Fridays and Saturdays as the official Direct Taxes Indirect Taxes
acts as a sea link between the Indian Ocean and weekend.
Mediterranean Sea; size, and juxtaposition to
Agricultural Land Tax Stamps Duties
Israel, establish its major role in Middle Eastern
geopolitics; dependence on upstream neighbors;
dominance of Nile basin issues; prone to influxes Real Estate Tax Customs Duties
of refugees from Sudan and the Palestinian
territories. Income Tax VAT

The Capital -
Cairo
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Co r p o r a t e
profits generated in Egypt. has to be paid in all cases.

Egypt Tax Dispute Cycle - The state council is the governmental court

I n c o m e Ta x . - Corporations and partnerships in Egypt are

responsible for tax disputes

- In addition, the taxpayer has also the right to

obligated to submit tax returns within four try solving the dispute within the tax dispute
months following the financial year end. While resolution committee for those disputes within
Corporate income tax is to be applied on profits the Egyptian General Petroleum Corporation the individuals are obligated to submit it no later the court.
earned during a given taxable period; they are EGPC; than the 31st March the following year.
generally applied to companies’ operating - According to last update per law 29/2018, the
earnings, after expense depreciations have been - 40.55% of the net taxable profits of oil & - The most recent update of Law 29/2018 priority of setting due amounts on the tax payer
deducted from revenues. In Egypt, the tax year is gas exploration and production companies explains that the above mentioned deadlines is as follows:
the financial year chosen by the company. (concession companies). are only applicable to the tax return, without the
detailed tax return tables and attachments. The a. Admin and litigation expenses
Egyptian corporations are subject to corporate remaining tax return tables and attachments are
Tax Filing Obligations to be submitted within 60 days following the
income tax “CIT” on their profits derived b. Withholding tax at source
from Egypt, as well as on profits derived from original deadline of the tax return submission.
An annual corporate income tax return must
outside of Egypt, unless the foreign activities If however, the tables and documents are not c. Tax due amounts
be filed even there is a tax loss – along with the
are performed via a permanent establishment submitted on the specified date, the entire tax
relevant payment of any tax due. The due date
outside of Egypt. return will not be officially considered. d. Late payment interest
for the tax return is 4 months following the year-
end.
Foreign tax paid by a resident entity outside - Egyptian Tax Authority (ETA) has the right to
of Egypt for activities subject to tax in Egypt perform the tax assessment within 5 years from
Capital gains from sale of assets
can be deducted from Egyptian tax provided the date of submitting the tax return.
that supporting documents are available. Capital gains tax is a type of tax levied on the
Additionally, foreign branches are subject to tax - The tax payer has the right to object on tax
profits that an investor realizes when he or she
on their profits derived from Egypt only. authority’s assessment within 30 days. In this
sells the capital asset for a price that is higher
case the dispute shall be at internal committee
than the net book price.
stage.
Taxable Base
Capital gains are subject to tax at the ordinary
- In case no agreement reached then the dispute
Taxable profit is to be determined based on the corporate income tax rates as they are treated
can be transferred to specialized committee.
net accounting profit of the company – as per as business profits (i.e. not a separate taxable
the Egyptian Accounting Standards – and after profit).
- If no agreement has been reached then the
applying the tax adjustments as per the income dispute may be transferred to appeal committee
tax law and regulations. Trading and capital losses derived from sales
through formal appeal by the taxpayer within 30
of other assets are deductible against taxable
days
capital gains.
Tax Rates
- Taxpayer has to submit a defense report within
Carry Forward Losses
The standard CIT rate effective as of 2015, is the appeal committee.
22.5% Tax losses can be carried forward for up to 5
- Appeal committee decision is to be issued with
years. Losses incurred in long-term contracts
This rate changes in certain circumstances, final result.
may be carried back for an unlimited number of
namely: years to offset profits for the same contracts.
- If the taxpayer is not in agreement with final
- 40% of the net taxable profit for (i) Central Bank appeal committee decision, then he has the right
It should also be noted that losses incurred
of Egypt CBE, (ii) Suez Canal Authority and (iii) to raise a court case within 60 days. However,
outside Egypt cannot be offset against taxable
the tax due as per appeal committee decision
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Ta x o n Capital Gains
Di v i d e n d s . on Se cur itie s.
Tax on Dividends was introduced by the Law no. provides a reduced tax rate or a tax exemption it Capital Gains on Securities 22.5% for non-listed shares, and no deferral of
53 of 2014, and was made effective on the 1st should be applied. tax will be valid.
July 2014. Dividends distributed by free zone companies/ Capital gains from the sale of securities realized
projects are not subject to tax on dividends. by resident and none resident persons are Capital gain tax will be suspended for listed
Dividends paid by corporations or partnerships, subject to tax as follows: shares until 16 May 2020.
including companies established under the
special economic zone system, to resident - A 10 % CGT rate will be applied on capital
juridical persons, nonresident persons or gains realized from securities listed in the
nonresident juridical persons who have a Egyptian Stock Exchange (ESE) and from a
permanent establishment in Egypt shall be source in Egypt. However, this tax has now been
subject to tax on dividends. suspended until 16 May 2020.

Tax Rates: - The standard CIT rate (i.e. 22.5%) will be applied
on gains realized from dealing in securities from
The standard tax rate is 10% without any an Egyptian source but not listed in the ESE, the
deductions or exemptions, but this can be capital gains realized abroad and those realized
reduced to 5% if the following conditions are from the sale of shares.
fulfilled:
Capital Gain from Revaluation of an
- The person holds more than 25% of the
distributing company’s capital or voting rights,
Egyptian Entity
and;
Capital gains arising from changes in the legal
structure of corporate entities as stipulated in
- Shares are held for a period not less than two
the Income Tax Law No. 91 of 2005, has been
years.
amended in 2017 to exclude the following two
items:
Profits from foreign branches in Egypt are
deemed distributed within 60 days following the
- Acquisition of 33% or more of the shares or
financial year-end. Moreover, branch remittance
voting rights in terms of number or value of
is taxed at a rate of 5%.
a residential company against shares of the
acquired company;
The law has granted some exemptions for
investment funds, parent companies and
- Acquisition of 33% or more of the assets and
holding companies under certain conditions. It
liabilities of a residential company by another
should also be noted that dividends in the form
residential company against shares in the
of free stocks/shares are not subject to tax on
acquired company.
dividends.
Based on the above, there will be capital gain
If a double taxation treaty exists between Egypt
tax resulting from share swap transactions or
and the home country of the shareholder which
shares against assets & liabilities at a rate of
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S a l a r y In com e All amounts in EGP annually

Ta x . First bracket: Up to 8,000 ($449)

Second bracket: More than 8,000 ($449), up to 30,000 ($1,682)
Exempted
10%
Third bracket: More than 30,000 ($1,682), up to 45,000 ($2,523) 15%
Fourth bracket: More than 45,000 ($2,523), up to 200,000 ($11,213) 20%
The tax year here is the calendar year. - An annual personal exemption of EGP 7,000; Fifth bracket: More than 200,000 ($11,213) 22.5%

Income tax is imposed on the total net income - Social insurance and other contributions to A tax credit has also been applied as of the
of natural persons (resident and nonresident), be deducted according to the provision of the 1st July 2018. This tax credit is calculated on
and applies to salaries and similar remuneration social insurance laws or any alternative systems; the total annual taxable amount (bracket) as
as follows: follows:
- Employees’ contribution to private insurance
- All earnings due to the taxpayer resulting from funds established in accordance with the - For those whose income is in the second
work with a third party: provisions of Law No. 54 of 1975* bracket, the tax credit rate will be 85%

- With or without a contract, - Premiums of life and health insurance on - For those whose income is in the third
the taxpayer and any insurance premiums for bracket, the tax credit rate will be 45%;
- Periodically or non- periodically, pension entitlement*
- As for those whose income is in the fourth
Whatever the names, forms or reasons for *For items 3 and 4 above, entitlements should bracket, the tax credit rate will be (7.5%).
those earnings, whether they are for (i) works not exceed 15% of the net income or EGP
performed in Egypt or (ii) from abroad and paid 10,000, whichever is less. - For those whose income is in the fifth bracket
from a source in Egypt. (i.e. more than EGP 200,000 annually), no tax
- The following collective allowance in-kind: credit is granted.
This includes wages, remunerations, incentives,
commissions, grants, overtime, allowances, a. Meals distributed to the workers In addition to the above the government has
shares and portions in profits, as well as b. Collective transportation of workers or recently provided more support for disabled
monetary privileges and allowances. equivalent transportation cost employees by increasing annual personal
c. Health care exemption by 50%.
- Earnings due to the taxpayer from a foreign d. Tools and uniforms necessary for performing
source for works performed in Egypt. the work Social Insurance:
e. Housing provided by the employer to the
- Salaries and remunerations for chairmen and workers for performing their work There are social insurance contribution
members of the board of directors in public obligations for both employer and employees
sector companies that are not shareholding - Workers’ share in the profits, to be distributed as follows (Monthly in EGP):
companies. according to the law;

- Salaries and remunerations for chairmen and Tax Rates: Social Insurance (as of July 2018)
members of the board of directors.
Maximum Amount Company Share Employee Share
The applicable salary tax brackets as of the 1st Rate Amount Rate Amount
Taxable Base: July 2018 are as follows:
Basic Salary 1,510 ($84) 26% 392.6 ($22) 14% 211.4 ($12)
The net taxable amount is determined based on Variable Salary 806.4 ($45) 369.6 ($21)
3,360 ($188) 24% 11%
the gross salaries (cash and/or in-kind benefits)
after deducting the following allowances:
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W it h h ol din g
Ta x .

Onshore - The government, local governmental units,

public entities, public sector companies and Albania Ireland Sweden
A withholding tax, also called a retention tax, public business sector and private sector will Czech Republic Morocco Yugoslavia
is a legal requirement for the payer of an item be exempted from taxes due on loan interests Indonesia South Africa Canada
of income to withhold or deduct tax from the obtained from abroad. The private sector will Malaysia United Kingdom Greece
payment, and pay that tax to the government also be entitled to this exemption on condition
that the loan period is at least for three years. Russian Federation Belarus Kuwait
instead. Typically the withholding tax is treated
as a payment on account of the recipient’s final Turkey France Palestine
tax liability. - Royalties; Algeria Japan Switzerland
In Egypt, withholding on local payments of a - Service charges; Denmark Netherlands China
value more than EGP 300 (per invoice) will - Sportsmen or artist activity charges, whether Iraq Spain Hungary
be applicable, the amount of which will vary paid directly or through any entity.
Malta United States Lebanon
depending on the type of activity as follows:
Withholding tax on payments to non-residents Serbia and Montenegro Belgium Poland
- Supplies/contracting 0.5% is not applicable for the following services: Ukraine Germany Syria
Austria Jordan Cyprus
- Services 2% - Transportation
Ethiopia Norway India
- Shipping
- Insurance Italy Sudan Libya
- Professional fees (individual) 5%
- Training Mauritius Yemen Romania
- Commission 5% - Participation in conferences and exhibitions Singapore Bulgaria Tunisia
- Registration in foreign stock markets United Arab Emirates Georgia Slovakia
Additionally, amounts paid by sole - Direct advertising campaigns
Bahrain Korea (South) Saudi Arabia
proprietorships or any legal entities to any - Hotel accommodations and like
- Services related to religious activities Finland Pakistan
natural person as a commission or a brokerage
fee that is not relevant to the work performed
will also be subject to 20% tax without any If a DTT exists which provides a lower
withholding tax rate, the rate within the DTT Despite this, a ministerial decree issued in
deduction.
should be applied. 2009, coming into effect from the 1st January
2010, highlighted that even if a DTT exists, the
Offshore Egypt has signed over 50 DTTs with the following resident company should deduct the full 20%
countries: and then approach the Egyptian tax authority to
Tax Rates: refund the difference between the domestic rate
and the treaty rate.
For payments made to non-residents for services
performed in or outside the country, a standard Starting from the 1st January 2013, free zone
rate of tax is charged at 20% and is applicable to companies/projects are also legally obliged to
the following: apply withholding tax on the non-residents.

- Yields and interest;

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Va l u e A d d e d
- Tax paid on sales returned. in Egypt, the Egyptian resident receiving the
service will have to fulfill these obligations for
- Tax charged on inputs. This includes the tax him without breaching his right to reimburse the

Ta x “ VAT ” . charged to the goods and services sold by the

owner through all distribution phases.
tax payments made from the later.

Items not eligible for tax credit

On September 7th 2016 the Egyptian government Registration Threshold - Items in the table subject to this tax or in-puts
implemented a fully-fledged VAT scheme which of goods and services subject to this tax;
took over the general sales tax regime previously
Any individual or juridical person who sold
in place. - Input tax included in the cost items;
taxable goods or services during the 12 months
prior to the 7th September 2016 with a turnover
The Law has become effective as of September - Exempted goods and services.
of at least EGP 500,000 (equivalent to US$
8th 2016.
28,250) must register for the VAT within 30 days.

What is VAT? Reverse Charge

Voluntary registration is allowed for individual/
juridical persons who have not yet reached this
VAT is an attempt to tax businesses at each threshold. These are applicable to services rendered by
stage of the supply chain from raw material to a those who do not reside in Egypt.
product that is utilized by the consumer. As the VAT Returns If a non-resident person not registered with the
good moves up through the supply chain, the
tax is charged incrementally by every business ETA renders a taxable service to a person not
A monthly return should be filed for the VAT and/ registered in Egypt:
that uses the material or product.
or the excise (table) tax due within two months
following the tax accounting month, except for In this scenario, the service provider must
VAT is applicable to services as well as goods,
April which should be filed no later than 15 June appoint a representative to fulfill his TAX duties
i.e. hotel stays, restaurant meals, legal advice,
each year. including registration, payment of VAT, the
and the like.
additional tax and any other taxes due according
The return must be filed even if no sales are to the law.
Tax Rates made within the tax period.
OR
Standard VAT rate of 14% applies to most of If the tax return is not filed before the deadline,
goods and services. the Egyptian Tax Authority has the right to make Egyptian resident receiving the service will
their own assessment. have to fulfill these obligations for him without
Machinery and equipment used in producing breaching his right to reimburse the tax
taxable or non- taxable goods or rendering payments made from the nonresident service
services are subject to a 5% VAT.
Tax Deductions
provider later.
These can be made for input tax.
Exported goods and services are subject to a 0% Nonresident person, not registered with the ETA
VAT. renders a service to:
Input tax is the VAT incurred or charged to the
registrant when he purchases or imports goods
Certain products are subject to different rates/ - VAT registrant not necessary for their activity
and services, directly or indirectly related to the
amount per unit (excise tax), and certain
sale of goods and services subject to VAT.
products and services are subject to both excise - Governmental entity, general authority, or
tax and the VAT. economic authority
When calculating the tax, the following should
be deducted from the tax due on the sales value:
If this person does not have a representative
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Stamp Duty Other Tax
Ta x . Ma tte r s.
Stamp tax was issued by law number 111 of 1980 Transfer Pricing and BEPS - Action 5 - Harmful tax practices
and its amendment, and as of August 2006, the
major stamp taxable amounts are as follows: Egyptian tax law contains specific tax provisions - Action 6 - Treaty abuse
relating to transfer pricing based on the arm’s-
- 0.4% on loans and credit facilities by Egyptian length principle starting from the issuance of - Action 13 - Country by Country Reporting
Banks. It is calculated as 0.1% on the highest the income tax law No. 91 of 2005. (CbCR)
credit balance per quarter to be calculated (50% The tax authorities may adjust the income of
on the bank and the other 50% on the customer); an enterprise if its taxable income in Egypt is - Action 14 - Dispute resolution
reduced as a result of contractual provisions
- 20% on advertising that differ from those that would be agreed upon N.B: Egypt has not yet signed the exchange of
by unrelated parties. information agreements on CbCR or mutual
- 15%, 20% and 60% on profits from bets, administrative assistance on tax matters.
lotteries and the like; However, according to Egyptian tax law, it is
possible to enter into arrangements in advance Foreign exchange Controls
- 2.4% on local payments by a governmental with the tax department regarding a transfer
authority/unit; pricing policy (advance pricing agreement
Egypt has a free market exchange system.
(APA)).
- Different rates for the supply and consumption Exchange rates are determined by supply and
of water, electricity and gas. demand, without interference from the Central
An APA ensures that transfer prices will not be
A proportional stamp duty will also be imposed Bank or the Ministry of Finance.
challenged after the tax return is submitted and,
on the purchase or sale of all securities, accordingly, eliminates exposure to penalties
regardless of whether such securities are and interest on the late payment of taxes Debt-to-equity rules
Egyptian or foreign, listed or unlisted, without resulting from adjustments of transfer prices.
deducting any costs as follows: The ETA, in association with the OECD, has The Egyptian tax law includes thin-capitalization
issued Transfer Pricing Guidelines. These rules with respect to the deduction of interest
- 2.5 per thousand to be borne by both seller and guidelines advise the taxpayers on the on loans, which applies if the debt-to-equity ratio
buyer and divided between both equally as of application of the arm’s-length principle in exceeds 4:1. The ratio applies to all debts owed
20th June 2017 until 31st May 2018; pricing their intragroup transactions, as well as to related and unrelated parties as well as to
outlining the documentation taxpayers should loans obtained from financial institutions. The
- 3 per thousand to be borne by seller and buyer maintain as evidence to demonstrate their limitation does not apply however, to banks and
and divided between both equally as of 1st June compliance with the arms-length principle. insurance and leasing companies.
2018 until the 31st May 2019;
In 2016, Egypt signed the Base Erosion & In case the debt exceeds such ratio, then the
- 3.5 per thousand to be borne by both seller and Profit Shifting (BEPS) inclusive framework to excess interest would not be considered a tax-
buyer and divided between both equally as of 1st be BEPS associate country by signing; Egypt is deductible cost.
June 2019. committing to apply the four minimum action
plan standards per BEPS as follows:
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Fr e e Z o n e Ta x .
- For other projects: 1% of the project investment - Market access using Egypt Trade agreements
costs at a minimum of US $ 10,000 and like (QIZ, COMESA, EFTA, Agadir, EU and Gafta
maximum of US $ 100,000. accessing 1.8 + billion customers through multi-
trade agreements).
2. Annual charges:
Free zones, existed in Egypt since more than - Upon export to the local market, duties and
twenty years, are an economic tool which can The articles of incorporation of the companies - For industrial projects: 1% of the value added sales tax/VAT are paid on imported components
be used by a given country to contribute to and establishments as well as the loan and to their products. only.
its economic development, and the Egyptian mortgage contracts related to their works shall
government has become more attune to their be exempted from stamp duty and notarization - For storage projects: 1% of the commodity - One-stop shop that provides the body with a
benefits in recent years. Free zones typically and registration fees for 5 years from the date of value upon the entry of the commodity (cost, single-point authority over other government
help economies by establishing export oriented registering in the Commercial Registry. Contracts insurance, freight) on their entry. agencies in core areas.
industries, attracting modern technology, for the registration of land necessary for
providing employment opportunities and establishing the companies and establishments - For service projects: 1% of total realized annual - Access to a specialized dispute settlement
maximizing foreign currency revenues. These within the private free zone system, shall also be revenues to GAFI as per the accounts approved center.
advantages are achieved by incentives such as exempt from the aforementioned taxes and fees. by a public accountant.
customs and tax exemptions. - Access to a competitive production center in
Those who choose to take advantage of the Special Economic Zones the Middle East-North Africa for many sectors.
With this in mind, the Egyptian government has many free zones which Egypt has to offer will
set up a number of public and private free zones incur the following charges: Special Economic Zones are particular type of - The General Authority for Economic Zone
within the country which foreign investors can modern free zone. In 2002, the Government North West Gulf of Suez has a supreme
take advantage of, particularly within the fields 1. Charges for services rendered by GAFI: of Egypt enacted Law No. 83 for the year 2002 committee that supervises the taxation system
of textiles, petrochemicals, transport and for establishing Economic Zones of a Special in the SEZONE.
logistics, and pharmaceuticals. Free zones companies pay charges for services at Nature which covers the North-West Gulf of
an annual rate of 0.5% of the project investment Suez Special Economic Zone (SEZone), located - The General Authority for Economic Zone
Those who initiate activity within one of these costs at a minimum amount of US $ 100 and in the Suez Governorate in the Sokhna area. North West Gulf of Suez has a special customs
free zones will enjoy a number of exemptions. maximum of US $ 1,000 or its equivalent in SEZone is the first economic zone with a special service under the supervision of a Supreme
The law permits the following exemptions for foreign currency. nature to be established in Egypt under this law. Customs Committee.
free zones:
- Financial guarantee to cover the project The development of SEZone is intended to
- Projects established in the free zones and their liabilities: provide an attractive environment for medium
profits shall not subject to the provisions of the and light industries as well as logistics services,
laws of taxes and duties applicable in Egypt (so Prior to the issuance of the resolution licensing thus enhancing economic activity in the region
long as such projects limit their activities to that for commercial activity, the companies should and creating new employment opportunities.
included in their practice activity license). provide GAFI with a financial guarantee to cover
its liabilities either in cash or through a letter of
- Goods exported abroad or imported by free guarantee issued by a bank registered in CBE. The following exemptions can be enjoyed in
zones projects to exercise their activities shall The value of the letter shall be determined as SEZones:
not be subject to import or export rules, or follows:
customs procedures related to exports and Incentives:
imports. They shall also not be subject to - For industrial projects: 1% of the project
customs taxes, VAT or any other taxes or duties. investment costs at a minimum of US $ 5,000 - 10% corporate tax rate.
and maximum of US $ 50,000.
- Except for passenger cars, all equipment, - 5% personal income tax rate.
supplies, machines and transportation vehicles - For storage projects: 2% of the project
necessary to exercise the activity licensed for investment costs at a minimum of US $ 10,000 - All imports are 100% exempt from duties and
the projects in free zones shall not subject to and maximum of US $ 100,000. VAT.
customs taxes, VAT or any other taxes or duties.
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Compa n y Fo rm a t i o n i n Eg y pt .
Below you will find an overview of the most common legal forms that a company can take within
Egypt, including individual companies which were introduced in the latest amendments of the Com-
panies Law No. 159.

One Person Company Branch L.L.C Joint stock company

Any natural or juridical person may estab- A foreign company may register a branch This type of company is usually formed for Joint stock companies are among the most
lish a company individually which will be office in Egypt if the company has a contract small projects that do not require major fi- commonly used legal vehicles in Egypt and
considered a limited liability company. with an Egyptian private or public sector nancing such as companies involved in in- are usually used in those cases where there
party to perform work in Egypt. ternal trade and services activities. is a manufacturing project to be established
in Egypt that requires major investments.

Formation: Formation: Formation: Formation:

The establishment of a one person com- No Requirements. A limited liability requires a minimum of The establishment of a joint stock company
pany requires one partner who may be a two (2) partners and a maximum number of requires a minimum of three (3) sharehold-
natural or juridical person. The branch office may be managed by a fifty (50) partners. There are no restrictions ers. There are no restrictions regarding the
branch manager(s) who does not need to as to the nationality of the partners. nationality of the shareholders.
The owner shall appoint one or more direc- be an Egyptian national(s).
tors for the company, specify their compe- A limited liability company may have any A joint stock company is managed by a
tencies and approve their signatures. The number of managers, one of whom must board of directors. The board of directors of
manager or the person designated by the be Egyptian. The powers of each manager a joint stock company must be composed
founder of the company shall represent the shall be shall be specified in the commercial of at least three (3) directors of any nation-
company before the courts and others. The register. ality.
manager or managers shall be responsible
for the management of the company before
the owner.

Capital: Capital: Capital: Capital:

The minimum capital should be paid in full There are no capital requirements but a de- The minimum capital should be paid in full The minimum capital requirement is EGP
upon application for incorporation. posit of 5000 EGP or its equivalent of the upon application for incorporation. 250,000 Note: Subscribers are obliged to
foreign currency. subscribe to 10% of the issued capital dur-
ing the formation of the company and such
subscription should reach 25% during the
three (3) months after formation. The re-
mainder of the capital should be subscribed
to within a period of five (5) years.
 24 25

One Person Company Branch L.L.C Joint stock company

Required Documents: Required Documents: Required Documents: Required Documents:

1. Preparation of the Articles of Incorporation 1. A letter from the director of the Commercial 1. Company’s articles of incorporation. 1. Preparation of the Articles of Incorporation
of the Company. Register office addressing the head of the of the Company.
investment service complex.
2.Power of attorney from each partner, or
2.Power of attorney from the founder of the 2. Copy of the mother company’s statutes. each shareholder. 2.Power of attorney from each partner, or
company. each shareholder.
3. A copy of the decision issued by the mother 3. Copy of each partner/shareholder’s ID.
3. Copy of the founder’s ID. company abroad to open a branch in Egypt. 3. Copy of each partner/shareholder’s ID.
4. A copy of the decision issued by the mother 4. If any of the partner’s is a legal
4. If the owner is a legal entity, then copy company abroad to appoint a branch Manager entity, then a copy of the their articles of 4. If any of the partner’s is a legal
of the articles of incorporation of the said in Egypt. incorporation will be required. entity, then a copy of the their articles of
entity will be required. incorporation will be required.
5. A copy of the resolution issued by the mother 5. Certificate of non-confusion
company abroad stating that no other branch
5. Certificate of non-confusion. 5. Certificate of non-confusion
has previously been opened in Egypt.
6. The approval of the legal entity partners
6. Approval from the founder of the one 6. A copy of a bank certificate proving of the establishment of the limited liability 6. The approval of the legal entity partners
person company, in the form of a board the transfer of EGP 5,000 (five thousand company, in the form of a board resolution of the establishment of the limited liability
resolution or a shareholders’ meeting Egyptian pounds) in foregin currency at the or a shareholders’ meeting resolution. This company, in the form of a board resolution
resolution. This document must be official bank rate, in the name of the branch. document must be legalized by the Egyptian or a shareholders’ meeting resolution. This
legalized by the Egyptian Consulate at your 7. A copy of the lease contract or the title deed Consulate at your end. document must be legalized by the Egyptian
end. of the premises. Consulate at your end.
7. Certificate from an authorized Egyptian
7. Certificate from an authorized Egyptian 8. A copy of the construction contract or bank that the capital of the company has 7. Certificate from an authorized Egyptian
bank that the capital of the company has agreement concluded for the execution of any been deposited in full. bank that the capital of the company has
been deposited in full. operation in Egypt. been deposited 10% of the issued capital
The contract should state a set objective, 8. Ownership or lease contract to prove the
duration and value.
8. Ownership or lease contract to prove the existence of a premises for the company. 8. Ownership or lease contract to prove the
existence of a premises for the company. • All documents should be translated and existence of a premises for the company.
notarized by the Egyptian embassy abroad
as well as the Egyptian Ministry of Foreign
Affairs.
• For construction contracts related to
construction activities, a certificate of pre-
qualification must be submitted proving
experience in the field requested to be
registered. The certificate should be presented
in English and coupled with a certified Arabic
translation.

Note: All the documents incoming from abroad must be translated, legalized by the Egyptian Consulate in the
country of origin and the Egyptian Ministry of Foreign Affairs. The translation must be also authenticated.

All companies must also hire a permanent lawyer and accountant.

Prepared by

Andersen Tax & Legal Egypt

Maher Milad Iskander & Co.

46 El-Thawra St., Heliopolis, Cairo, Egypt

T +2(02)22911276
F +2(02)22911349
info@AndersenTaxLegal.com.eg
www.AndersenTaxLegal.com.eg