Representative offices can be created much more easily than actual subsidiaries or branches. Despite this, some regulations apply to representative offices as well and they have to be observed in order to comply with the laws of the respective country. According to the Executive Regulations of the Companies Law, foreign companies can establish representative offices in Egypt for the purposes of conducting market studies and research on behalf of the foreign company.
In order to comply with Egyptian law, a few registration conditions have to be observed. First and foremost, the representative office must be registered with the GAFI. This happens as follows:
- A lawyer has to be given rights to act as a proxy for the foreign company that wants to establish a representative office in Egypt.
- The authorities have to be dealt with. First of all, the Authority for Investment and ministries that have to do with the scope of the representative office (Ministry of Health for a pharmaceutical company, etc) must be contacted.
- Documents, such as the company contract and the articles of association, have to be legalized in the embassy of Egypt in the company’s country, after they have been translated into Arabic.
- A contract has to be made for rental or purchase of a property for the office.
- A banking certificate has to be made that corroborates that no less than 5000LE have been transferred via bank wire for the initial deposit of the Office in Egypt.
- A 1000LE fee has to be paid for the General Authority for Investment.
- ID documents of the office manager have to be sent for inquiries of Egyptian security institutions.
- The documents have to be legalized in Egypt from the Foreign Affairs and other relevant ministries.
The office can be managed by an Egyptian or a foreign manager. The representative office is controlled by the parent company. Its activities can come to scrutiny under the GAFI in order to ensure that laws and regulations are observed carefully.
As representative offices don’t participate in any commercial activities they aren’t profitable and therefore cannot be taxed. Employees of representative offices are, however, subject to income taxes as they do receive wages.