Egypt’s legal investment guide 2019


Mohamed Hashish
M. +2 010 0047 0077
T. +202 2516 2131 (Ext. 101)

May 19, 2019

Egypt is one of the three largest economies in Africa and is strategically positioned at a crossroads between the East and West, making the country a significant player in international trade in the Middle East and Africa region. Egypt is home to the Suez Canal which connects the Mediterranean Sea with the Red Sea and is a key artery in global trade.

The total area of Egypt is 1,001,450 square kilometers including 995,450 square kilometres of land and 6,000 square kilometres of water. According to the Egyptian Central Agency for Public Mobilization and Statistics, the population reached more than 100 million people in 2019. Egypt is divided into 27 governorates, 217 cities and 4617 villages. Governorates with the highest population are Cairo (10.8%), Giza (8.6%) and Sharqiyya (7.4%).

The Egyptian legal system is primarily based on the French civil legal system, various other European codes and religious law. In practice, religious law is applied only to personal and family matters which are governed by the religious law of the individual concerned. The keystone of Egyptian law is the Constitution, which was passed in a referendum in January 2014 (the Constitution).

Investment Outlook 

The Egyptian government has been working so hard to attract more Foreign Direct Investment (FDI) to the country and these efforts resulted in recognizing (i) Egypt as one of the top five (5) destinations globally for greenfield FDI according to the Financial Times; and (ii) Cairo was also named one of the top 10 cities in the world to found a tech-startup last year according to Forbes.

The majority of this investment came in the energy, construction and transportation sectors. 

The government is in the process of completing a number of “mega projects” including, inter alia, (i) the new Administrative Capital, the first phase’s total space of approximately 44.1 square kilometres with a total construction value of 20 billion Egyptian Pounds (EGP), which is equal to approximately US$1.2 billion; (ii) a new EGP 4.4 billion line for the third phase of the metro, the fourth phase of the metro with a total value of USD 1.2 billion and the first skytrain with a total value of USD 1.5 billion; (iii) Zohr gas field, which is the largest ever natural gas find in the Mediterranean Sea; (iv) Benban Solar Park, which is a photovoltaic power station under construction with a planned total capacity of 1650 MWp and will be the largest solar installation in the world; and (v) El Dabaa Nuclear Power Plant, which is the first nuclear power plant planned for Egypt.

The Government has been busy with proposing key amendments to the investment-related laws since more than two (2) years, and the Government succeeded in obtaining the approval of the Parliament to a number of new key laws such as Industrial Licenses Law No. 21 of 1958, Value Added Tax Law No. 67 of 2016 (the “VAT Law”), Foods Safety Law No. 1 of 2017 and finally the Investment Law No. 72 of 2017 (the “Investment Law”).

Forms of Corporate Structure s

There are a number of laws governing business activities and transactions in Egypt including, among others, the Trade Code No.17 of 1999 (the “Trade Law”), the Companies Law No.159 of 1981 (the “Companies Law”), the Executive Regulation No.96 of 1982, the Investment Law, and the Commercial Registry Law No.34 of 1976.

In Egypt, non-Egyptian may set up a Representative Office in Egypt for the purpose of studying the Egyptian market and/or potentials of productions for three (3) years only, except for non-Egyptian banks, and unless these (3) years extended by the General Authority for Investment (“GAFI”). However, representative offices are not allowed to trade in Egypt.

The Companies Law and Trade Code provide for several legal forms of businesses similar to those available in North Africa and Europe, these include:

  1. (i) A Branch of foreign company, which is commonly used to perform works of contractual nature.
  2. (ii) A Joint Stock Company, which resembles a U.S. corporation or a French société anonyme.
  3. (iii) A Limited Liability Company, which corresponds to the French société à responsibilité limitée (S.A.R.L.). It is like an incorporated partnership, a U.S. closed corporation or a British private limited company.
  4. (iv) A One Person Company (“OPC”), which is somehow similar to the European single-member company “Societas Unius Personae”.

The Egyptian law does not recognise the concept of piercing the corporate veil and, therefore, the liability of shareholders in joint stock companies or allotment holders in limited liability companies is only limited to the paid-up capital except in some cases during the operation of OPC.

Incorporation Procedure

Investment Promotion and Incentives

Finally, the Parliament passed a new Investment Law on May 7, 2017 (the “New Investment Law”) as a part of the ongoing efforts aiming at bringing back more FDI to the country.

Upon the issuance of the New Investment Law by the President in the upcoming days, it will replace the existing Investment Law No. 8 of 1997 that was amended by the President during the EEDC.

The New Investment Law provides a number of key guarantees and incentives including, inter alia, the following: (the “Incentives”)

  • Fair and equitable treatment to both foreign and Egyptian investors; however, the Prime Minister will be having the right, subject to the principle of reciprocity, to grant favorable treatment to foreign investors;
  • Granting a residence permit to foreign investors throughout the term of their investment projects in Egypt;
  • None of the Egyptian Authorities will be having the right to suspend or terminate any license and/or allocation of properties granted to any investor without satisfying the following conditions:
    1. serving a notice to the said investor outlining the relevant breaches and/or violations; made thereby;
    2. granting a reasonable time to the said investor to legitimize the breaches and/or violations above; and
    3. taking an opinion from the General Authority for Free Zones and Investment (“GAFI”) before issuing of the said suspension or termination.
    •  The right to repatriate profits and/or receive international finance without any restrictions;
    • Accelerating the liquidation process by requiring receipt of a written notice from the competent authorities outlining all liabilities on the company that is under liquidation by no later than one hundred and twenty (120) days from the date of submitting the relevant liquidation request;
    • The right to directly import raw materials, equipment, spare parts and/or transportation means as necessary for investment project without requiring the registration with the Importers Registry;
    • Exemption from stamp duty and notarization fee imposed on Articles of Incorporation, Facilities and Loans Agreements, Security Documents and/or Plot of Lands Purchase Agreements for five (5) years starting from the date of registration with the Commercial Registry;
    • Application of a unified custom duty at a flat rate of only 2% of the value of any equipment, machinery and devices that are necessary for establishment of investment projects;
    • Application of a unified custom duty at a flat rate of only 2% of the value of any equipment, machinery and devices that are necessary for establishment or continue any infrastructure projects;
    • Exemption from the custom duty that is imposed on importation of mould or any similar tools for the purpose of temporary using same in Egypt for industrial projects (Article 10);
    • Tax reduction for seven (7) years starting from the date of starting investment projects in Egypt at the following rates, subject to the issuance of the Executive Regulation of the New Investment Law,:
    1.  70% of the investment costs for the investment projects that will be established in the geographic locations most in need of development as to be specified by the Central Agency For Public Mobilization & Statistics (“CAPMS”) as per the distribution of investment activities in accordance with the Executive Regulation that will be issued for the New Investment Law;
    1. 50% of the investment costs for the investment projects that will be established in the geographic locations in need of development, other than the locations stated in Item (i) above, as to be specified by CAPMS as per the distribution of investment activities in accordance with the Executive Regulation that will be issued for the New Investment Law;
    1. 30% of the investment costs for investment projects in all over the country with any of the following:
    • projects with extensive manpower;
    • Micro and Small Enterprises;
    • projects producing or depending on new and renewal energy;
    • national and strategic or tourism projects as to be specified by the Supreme Investment Council in Egypt;
    • electricity production and distribution projects as to be specified by the Prime Minister;
    • project exporting its production outside the Egyptian territory;
    •  automotive production and its supporting projects;
    • wooden, furniture, printing, packing and petrochemical projects;
    • production of antibiotics, pharmaceutical, cancer drugs or beauty treats;
    • production of leather;
    •  foods and agricultural production as well as management of agricultural waste; and
    • engineering and mineral production.
    • The Prime Minister may grant any of the following additional incentives:
    1. establishment of a special customs gates for imports and exports related to an investment project;
    2. bearing the cost of connecting utilities to the investment project by the State upon the operation of such project;
    3. bearing the personnel technical training costs by the State;
    4. refund of 50% of the value of any plot of land that is allocated to industrial projects providing that the operation thereof shall take place within two (2) years starting from the date of handing over the said; and
    5. allocation of plots of lands for free of charges for strategic business activities.

The Incentives are available to both foreign and Egyptian investors providing that a number of conditions shall be satisfied including, inter alia, the following:

    • Incorporation of a new company in Egypt (“NewCo”) with an exception to the companies that were established not more than thirty (30) months before the issuance date of the Investment Law and have not yet start any investment in Egypt;
    • The NewCo shall be incorporated by no later than three (3) years from the date of enforcement of the Executive Regulation of the Investment Law, unless extended for another term by virtue of a decree from the Prime Minister;
    •  having clear and regular books providing that if the NewCo will carry out investment activities in different zones, then the NewCo shall have separate clear and regular books for each of the said zone; and
    • The NewCo and/or its shareholders shall not (i) use any asset(s) of any company existing as of the date of the Investment Law, or (ii) liquidate any company during the term specified in the second item above for the purpose of establishing the NewCo.

For the first time in Egypt and as an important step towards the liberalization of the Egyptian market, the Importation Registrar Law No. 121 of 1982 (the “Importation Registrar Law”) was amended on February 03, 2018 by Law No. 9 of 2018 (the “Amendments”), which Amendments were published in the Official Gazette on February 7, 2018 and entered into force as of February 8, 2018, whereby:

    • production and services companies operating in Egypt are now not required to be registered with the Importation Registrar in order for the said companies to import anything that is essential for their operation in Egypt in accordance with Article 2 bis of the amended Importation Registrar Law and, therefore, up to 100% of the entire capital of the said companies can be held by non-Egyptian investors to the extent allowed under Egyptian law; and
    • non-Egyptian investors are now allowed to hold or acquire up to 49% of the share capital in any company carrying out importation business for re-sale purposes in Egypt.

Immigration, Employment and Local Content

Employment in Egypt is governed by the Egyptian Labour Law “the Labour Law” which provides the following:

Type of employment contract

Labour law provides for three broad types of employment contract in Egypt:

    • Employment Contract for Specific Work – this is concluded for a specific work and ends once the relevant work is completed.
    • Employment Contract for a Definite Period – this ends with the expiry of its period and can be renewed for one or more periods. In the event that the work period ends and the employee continues to work for the employer without renewal of the Employment Contract, it will be considered as being an Employment Contract for an Indefinite Period (see below).  
    • Employment Contract for an Indefinite Period – this can be terminated by the employee by virtue of a resignation, after providing the employer with a notice period. The employer can also terminate the Employment Contract for an Indefinite Period in specific cases whereby the employee has committed serious or gross error specified in the Labour Law. In the event that an error is not considered a serious or gross error by the Labour Court, the employee shall be entitled to a compensation amounting to at least two months of salary for each year of service.

Employee’s Profit Sharing

According to the law on Companies and its Executive Regulation (the Companies Law), the employees of Egyptian Joint Stock Companies and Limited Liability Companies having a capital of at least EGP 250,000 (approximately US$13,824) are entitled to at least 10% of the profits distributed by the Companies, which shall not exceed the annual payroll of such companies. 

Foreign Employees    

Foreign employees must obtain a work permit in order to work in Egypt. A request is submitted to the Ministry of Manpower and Immigration to consider granting a one year work permit, which can be renewed each year for a maximum of three years. 

The ratio of foreign employees must not exceed 10% of the total number of employees and must not exceed 20% of the company’s payroll.

Real Estate

In general, real estate ownership is protected by law against expropriation and there are no restrictions on foreign nationals owning, leasing or otherwise real estate in Egypt except for specific locations, namely Sinai and/or North or South Kantara.

Banking, Finance and Exchange Control

The Central Bank of Egypt (“CBE”) decided to float its Egyptian Pounds as of November 3, 2016 in order to secure the IMF’s USD 12 billion Loan. As a normal consequence of the floating, the exchange rates at both the official and parallel markets are now likely the same.

Foreign investors are generally allowed to deal with the banks that are registered with the CBE and open bank account(s) therewith. However, within the limits allowed under the Egyptian laws, each of the said banks has its own policies for providing banking and finance services.

Opening a bank account can be made on the spot with most of the banks in Egypt providing that all necessary documents are submitted to such bank. Furthermore, there is a number of banks in Egypt that allow their customers to open bank accounts online.

Investors are freely allowed by law to transfer dividends to home country; however, it is recommended that investors secure their own source of foreign currency as each bank is currently applying a list of priorities for exchanging Egyptian Pounds with any of the foreign currencies. This list may differ from bank to bank.


Companies in Egypt are subject to the following taxes:

Income Tax

Companies are subject to a flat rate of 22.5% on yearly net income.

As of July 2014, a 10% withholding tax has been imposed on the distribution of dividends by Egyptian companies to resident and non-resident shareholders, whether physical or judicial persons (the Shareholder). The rate of 10% is reduced to 5% if the Shareholder holds more than 25% of the capital and/or has voting rights for at least two years.

Personal Income Tax

Personal Income Tax is imposed on the annual net salaries paid to residents at the following progressive rate:

IncomeTaxable Rate
0 – EGP 8,000 (US$ 0 – US$ 478) 0%
EGP 8,001 – EGP 30,000 (US$ 478-1792.11)10%
EGP 30,001 – EGP 45,000 (US$ 1792.11- 2.688.172)15%
EGP 45,001 – EGP 200,000 (US$ 688.172- 11.947.43)20%
Above EGP 200,000 (US$ 11.947.43)22.5%

Tax on salaries must be delivered to the relevant taxation department within the first 15 days of the month following the deduction. In addition, a salary tax return shall be submitted on a quarterly basis stating the number of employees, the total salaries during the last three months, the amounts withheld on account and the paid amounts.

Sales Tax

According to the Egyptian Sales Tax Law (the Sales Tax Law), the General Sales Tax (the GST) shall be levied on locally manufactured goods or imported goods and on services.

Standard tax rate levied on commodities is 10%, except for certain commodities, stipulated in the Sales Tax Law, which have special tax rates. 


A new law under No. 67 of 2016 was issued and enforced in Egypt in September 2016 applying VAT Tax to all products and services with some exemptions (the “VAT Law”).

Before the adoption of the new VAT Law, there was no VAT Tax in Egypt but only a General Sales Tax at a standard rate of 10% was levied on locally manufactured goods or imported goods and on services.

The new VAT Law revoked the General Sales Tax Law No. 11 of 1991 and applied VAT Tax at a standard rate of 13% for the financial year 2016/2017, which rate shall be increased to 14% as of the financial year 2017/2018 (the “Standard VAT Rate”).

In addition to the Standard VAT Rate, the new VAT Law applies also an additional VAT tax at different rates to specific products and services. For example, mobile telecoms services will be subject to the standard VAT tax at the rate of 13% for the financial year 2016/2017 and 14% as of the financial year 2017/2018 in addition to a special VAT tax at the rate of 8%.

It worth noting that the new VAT Tax shall also, with some exemptions, be applied to any legal or natural person (including non-resident person(s)) selling or providing services to any company in Egypt. The said exemptions include, inter alia, the following:

    • Dairy products for children.
    • Milk, sugar and tea products.
    • All types of bread.
    • All types of slaughter animals, birds and seafood.
    • All agricultural products.  
    • All vegetables and fruits expect potatoes. 
    • All legumes and table salt.
    • Crude petroleum and natural gas.
    • Pure gold and silver.
    • Producing, distributing and transferring  electric current.
    • All paper products and postage and financial stamps.• Civil airplanes and all of its components.
    • Purchasing and selling currency through the banks that are registered with the CBE.
    • Education, training and scientific research services.
    • Insurance and reinsurance services.
    • News agencies’ services.
    • Advertising services.

Dispute Resolution

Court Litigation

The Egyptian Judicial system is based on the French system of civil law, adopting a dual-judicial system, with the ordinary judicial courts (the Ordinary Court) handling civil and criminal cases and the administrative courts (the Administrative Courts) handling administrative disputes with governmental and administrative bodies and authorities.

Civil and Commercial Disputes

Civil and commercial disputes are handled by the Ordinary Court system which is governed by the Civil and Commercial Code of Procedure. Under this law, the ordinary court system contains the following main courts:

    • • Court of Cassation, which is the highest court in the Ordinary Court system
    • • Court of Appeal, which has jurisdiction over appeals lodged by opponent against judgments of lower courts
    • • Courts of First Instance, in which the claims are started 

Constitutional Matters

Constitutional matters are handled by the Supreme Constitutional Court which has jurisdiction over cases regarding the constitutionality of legislation, conflicts of competence between judicial courts and/or authorities, conflicts between two or more un-appealable judgments and interpretation of application of law. 

Economic Disputes

Economic disputes are handled by the Economic Courts that are modern specialised courts established in accordance with the provisions of the Economic Courts Law. The Economic Courts have jurisdiction over disputes set forth under a number of financial laws, such as the Investment Law, the Capital Market Law, and the Banks Law 

Administrative Disputes

Administrative disputes are handled by the Council of State. In addition to disputes with governmental and administrative bodies or authorities, the Council of State Law provides the right to individuals or entities to challenge any conclusive decisions for the rescission of the relevant judgements.


Egypt is a pro-arbitration jurisdiction and has adopted the New York Convention. Egypt has made no reservation to this convention. In addition, the Arbitration Law No. 27 of 1994 expressly stipulates that arbitration awards are enforceable in Egypt.

In order to enforce an arbitration award in Egypt, an enforcement order must be obtained by the competent Court of Appeal, providing that such arbitration award does not contravene the Egyptian public order or morality, and does not deal with rights over certain issues such as immovable properties located in Egypt, personal status or criminal issues.

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