Here’s a practical guide from Enterprise Singapore on the nuts and bolts of setting up shop in Egypt.
There are three main types of business structures which you can operate from in Egypt1.
An LLC is recognised by its simple structure and the ease and swiftness of its incorporation before competent authorities. A LLC must be established by two or more shareholders and no more than 50 shareholders. Applicable laws do not stipulate any restrictions on the nationality of the partners. LLCs may be fully owned by foreigners as a general rule, provided that at least one of the general managers is an Egyptian.
There must be at least three shareholders in a JSC. Similar to LLCs, a JSC may be fully owned by foreigners, whether judicial persons or individuals. Each shareholder’s liability is confined to the value of shares which he/she subscribes. The shareholders are jointly responsible for the obligations they undertake.
A JSC may be listed on any stock exchange and may issue bonds or other financial instruments to the public. The shares of the JSCs may be offered to public subscription, if so decided by the shareholders.
The Companies Law was amended by law No. 4 of 2018 to introduce the legal basis for the establishment of SMLC's. According to the new amendments, individuals or companies can individually establish an entity with limited liability.
SMLC's are generally subject to the same provisions applicable to LLC's. However, its capital shall be paid in advance in full. In addition, this type of company is prevented from certain activities such as insurance, banking, receiving deposits and investing capital on behalf of others.
1 Healy Consultants Group PLC, Business entities in Egypt
The steps to establish a new business entity in Egypt are as follows:
LLCs & JSCs:
There are no restrictions on repatriation of profits as long as supporting documentation can be provided.
An LLC is permitted to engage in all business activities and may be owned by foreigners. LLCs are not permitted to import goods or equipment for the purpose of trade, unless it is at least 51% owned by Egyptian shareholders.
A JSC may be 100% owned by foreign investors. However, the company does not have the right to import. Similar to LLCs, the company should be at least 51% owned by Egyptian shareholders in order to import4.
2, 3 AP Consulting, Middle Eastern Laws
Banking is exclusively held by the State. A joint venture is required for certain sectors, namely hydrocarbons and real estate.
You may apply for licenses after the incorporation of your company.
The limit of a company's capital will be set by the General Authority for Investment & Free Zones (GAFI) at the same time as the application for incorporation. It is possible to increase your company's capital, depending on the needs. However, do take note to alert GAFI on any significant increases.
5 PwC, Doing business in Egypt: A tax and legal guide, 2019
The current corporate tax rate is at 22.5%.
It is imposed on:
Incentives will be provided for businesses that meet specific criteria, including reduced energy prices, and related payment facilities, subsidies on technical training and utilities allocation expenses.
To be eligible, your project should have started and satisfy at least of one of these conditions below:
Companies are required to submit a tax return within four months of the end of their financial year. They are required to assess the amount due in the form of a self-assessment.
Yes, dividends distributed by resident companies to resident or non-resident individuals or companies are subject to a 10% withholding tax.
Yes, Singapore and Egypt signed a Double Tax Avoidance Agreement in May 1996. The agreement came into effect in January 2005.
Yes, at 14%. This rate applies for all goods and services, except for machinery and equipment used for production purposes, which are subject to a 5% VAT.
6 Deloitte, International Tax: Egypt Highlights 2019
Employers must deduct tax from the employee's salary and transfer it to the Egyptian tax authority on the employee's behalf.
Your Singaporean employee would need to obtain a work permit from the Egyptian Ministry of Manpower and Immigration before being able to stay and work in Egypt. There is a difference between the procedures that apply to a board member or a manager in a company versus an employee.
Please note all information is based on online sources, and is provided in good faith for guidance and reference purposes only. It is accurate as of June 2019.