Opening a company in Egypt, opening a business in Egypt

Our law firm offers a direct procedure for opening a new company in Egypt of the following types: branches, representative offices, LLC, CJSC, OJSC, Sole Proprietor. The procedure for registering a company for the owner and his partners is similar for Egyptians and foreigners. The procedure includes the following steps:

1. Choosing a field of activity: some areas are currently not available in Egypt for trading companies, for example, medicines and dietary supplements (BAA – biologically active additives), cosmetic products – opening is not available due to lack of licenses even for Egyptian companies – this has not been available for the last 8 years. If you still want to open a company in this area, then you need to buy an old readymade shelf company that was opened earlier and already has a license to work and trade in cosmetics, dietary supplements (BAA – biologically active additives) or medicines. Our company can provide a search for a company with a license with a good history specifically for your area, while we will carry out all the purchase and registration procedures. A ready-made company with a license to sell medicines, dietary supplements (BAA – biologically active additives) or cosmetics costs from 3.500.000 Egyptian pounds, and this is not the current price. The cost of a lawyer’s services is not included in this price. Travel companies organizing pilgrimage trips to Saudi Arabia and Jerusalem and any other religious tours are also not allowed. All other areas (not so specific) are available for registration. Depending on the type of activity of the company, the authorized capital is determined. The tourism sector is also not available at the moment, the purchase of a ready-made company is required and the price depends on what goals will be set for the travel company quite a lot: providing trips and tours, hotel business, transportation and cruises, the need to purchase a visa between countries, etc.
2. Companies engaged in importing products to Egypt are unavailable for registration to foreigners from 2019, but under certain conditions, the foreign co-owner can obtain the right to import after the closing of the official accounting report after one full year of operation. For example, a supply company, closing the year with a net profit of 5,000,000 Egyptian pounds, having paid the full tax on this profit, and also having an Egyptian citizen as a co-founder with a 51% ownership of the company, has the right to apply for permission to import products from other countries. Since 2020, there is no mandatory registration for one of the Egyptian directors, the founder and director can be a citizen of another country. Sole Proprietor – 1 founder and any number of Egyptians for employment, as well as foreigners, based on the laws of employment in Egypt or informal employment. The basic rule for the official employment of a foreigner with a work visa is that for 10 Egyptian workers officially employed, there is 1 foreigner officially employed. Form of ownership of LLC – at least 2 co-founders, both can be foreigners. Officially employed Egyptians and foreigners are required to pay taxes and social contributions. Form of ownership of JSC – from 3 co-founders of the Egyptians or foreigners.
3. Choosing the name and type of company. We always offer an easy way to open a company – this is a new form of ownership compared to opening a branch or representative office. Opening a branch or representative office requires a package of documents from the parent company, including a preliminary contract with a new client in Egypt, in order to prove to the state registration authorities the legal ability and necessity of opening this particular type of company in Egypt.
4. Authorised (basic) capital – at least 10,000 Egyptian pounds. Some areas of activity, such as media, or film making, require 5,000,000 Egyptian pounds as a authorised capital. The banking industry and the financial sector can be established with a basic capital of 100.000.000 Egyptian pounds. Leasing services also require a large authorised capital (about 5.000.000 Egyptian pounds) and the opening procedure is quite lengthy due to the verification of the founders and the company by the national security of the country. Legal stock markets for stock trading start from 3-4 million Egyptian pounds, and at the moment it is not so easy to open such a company, because there are a huge number of different checks. Entertainment area for tourists – the authorised capital is 10.000 Egyptian pounds. For partners to have a resident (business) visa for 1 year, the authorised capital of the company must be at least 35,000 US dollars. The issued visa can be renewed annually for 3 partners of one company (co-founders). The authorised capital always belongs to you and it is not necessary to have it on the account (except for some specific areas of activity related to services in the military industry or for state support). The capital figure is specified in the memorandum of association, and the tax on the opening of the company is calculated based on the amount of the authorised capital. For presentable companies with brand names working in the procurement, construction, VIP services, the recommended figure for the authorised capital is more than the minimum visa $35,000 in order to maintain the company’s image with government agencies, especially where permission is required. This is not a mandatory requirement, but highly recommended, especially for those companies that want to obtain an import license in the future. The amount of duty paid on the authorised capital varies from 0.5 to 5% of the amount of the authorised capital. But the minimum amount for all government fees is around 15.000 – 20.000 Egyptian pounds.
5. Office (or warehouse) rent. The memorandum of association must always include the legal address of the company – the office for work. In some areas of activity, simply some address and a lease agreement in a residential or commercial premises equipped with utilities is sufficient. Our company provides services for securing a lease agreement for a premises or office, necessary for registering a company in Egypt. For companies with an industrial scale or for those who need production or storage space – of course, one address will not be enough. Our company provides a full range of legal services for company registration in Egypt, however, we do not provide market analysis or business intelligence for clients wishing to open a company in Egypt. We may connect third parties and we are not responsible for the information they provide to you.
6. Obtaining permission from the Department of Homeland Security. An important step after the opening of the company is its verification by the Department of Homeland Security. The work permit can be revoked by the departments in case of serious deviations and violations in the field of security, such as criminal offenses of the founders, a terrorist threat to the security of the country. In these cases, the company may be arrested and closed, and its activities blocked. The founders of the company will also be under arrest until the verdict is clarified.
7. Taxes. What types of taxes are there in Egypt? There is a general income tax and there are several different levels and percentages of tax collection depending on the company’s income for the year. For incomes up to 15.000 Egyptian pounds, the tax is 0%. Income tax for companies is 23% of net income. Net income in this context means full profit minus any costs for the maintenance and operation of the company and its employees: from renting premises, salaries to car depreciation, gasoline consumption, and other expenses. Value added tax on products and services is VAT 14% of the base price, which is added by the company for services or resale of products. In the case of real estate, the tax is 2.5% of the sale price of land or other objects after construction is completed. For branches of foreign companies, we can offer a scheme with zero taxes, this information can be obtained at a paid consultation.

A few words about opening a company in practice.

In practice, in Egypt, the opening of a new company may be somewhat delayed. Realistically, it can be just a few days, but in individual cases, the process can be complicated by many circumstances, so it is better to initially have more time in store. Let’s be honest, opening a company in Egypt equals getting a name, documents in the form of authorized capital, a registration card and a VAT tax card, all of that does not take so much time. And in fact, the company will already begin to work even for cash.

Opening a bank account will take longer. In connection with the new laws and rules of the bank in 2022, everything is more difficult. Opening a bank account requires a resident visa from the applicant. If we have a lawyer, we can get by with a tourist visa. However, among other things, a rented office is required (we will also provide it by agreement), a notarized lease agreement, provided utility bills, and in some cases even the landlord himself. After that, the bank will start the procedure for opening an account (in Egyptian pounds, in dollars, in euros) and it will take from 3 days to 2 weeks. In a situation with citizens of Egypt or with residents of the country, everything can happen much faster. Opening an account for a non-resident will take 10 working days, and linking plastic cards to this account will take 2-3 weeks. We would like to note that an individual resident of Egypt (foreigner) will open an account on the same day and can receive a plastic card within a week.

And a little about obtaining a resident (business) visa for owners of companies in Egypt with an authorized capital of more than $35,000. As we wrote above, the funds themselves should not be in the bank account, state duties must be paid from them. Obtaining a visa can take at least 3 months of waiting. Extending a visa does not affect the right to stay in the country, no penalties for waiting or extending a resident visa will be imposed.