A branch is not required to have a shareholder or director. The parent company only appoints a manager, an individual who can be a resident of any country. A branch can have as many managers as is required to carry out activities under the contract.
If the activities under the contract are related to the import of goods, it is necessary to appoint a special manager, an Egyptian resident who will supervise the execution of the contract on site[1].
A branch has no authorized capital.
As a general rule, it can be a virtual office. However, in the case of import-related activities, the authorities may want to visit the office during the registration, and it will then be necessary to make a proper lease agreement.
There is no requirement to hire local personnel. A branch may have no employees at all, only managers.
The documents must be translated into Arabic and duly certified by a translator.
The company manager is the person who operates the local bank account. If necessary, it is possible to issue a power of attorney for operating the account (for example, to the company’s beneficial owner, so that he too has access to the bank account).
This will require providing documents that disclose the ownership structure of the parent company down to the ultimate beneficial owners.
Compliance fee is payable upon registration of a branch, renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, and in the case of other changes in the company structure, as well as for the signing of documents.
All companies, including branches, are required by national law to prepare annual financial statements; these statements are subject to mandatory audit. Financial statements can only be audited by a certified auditor from the list of the Egyptian Ministry of Finance.
The financial statements of your company will be prepared, filed and audited by local specialists with our assistance (in accordance with the practice existing in Egypt, accounting services are provided on a monthly basis). A branch must have an auditor who is a certified specialist in Egypt.
A corporate income tax return must be submitted to the tax office annually within 4 months of the end of the financial year[4]. VAT returns are submitted monthly within 1 month of the end of the tax period.
Speaking of taxes as such, the corporate income tax rate in Egypt is 22.5% of the company’s net taxable income. Resident companies are taxed on their worldwide income, while non-resident companies pay tax on profits derived from their permanent establishments in Egypt.
The standard rate of value added tax (VAT) is 14%; special rates of 5%, 8% and 10% may apply in some cases; there are also goods exempt from VAT.
The cost will need to be calculated on a case-by-case basis because additional permits from government agencies may be required when registering a branch (depending on the contract).
[1] The legislation in this regard has recently been amended to allow branch managers to be all foreigners. However, if the contract is a complex one, a dedicated import manager may still be required. This issue will need to be discussed separately.
[2] To register a branch, it is necessary to provide an existing contract with any Egyptian entity, whether the Egyptian government, public sector, or a private company.
[3] The list of documents required for registration of a branch is not exhaustive.
[4] In Egypt, the financial year is different from the calendar year and runs from 1 July to 30 June. However, the company may set its own financial year for reporting purposes and state it in its Articles of Incorporation.
[5] The fees are valid as of the date of sending of this offer.