Doing Business in Egypt: The Complete Legal Framework for Foreign Investors.

Egypt represents one of the largest and most dynamic markets in the Middle East and North Africa region. With a population exceeding 106 million, a strategic geographic position connecting Africa, Asia, and Europe through the Suez Canal, and a government actively pursuing economic reform and foreign investment attraction, Egypt offers substantial commercial opportunities — alongside regulatory complexity that requires careful navigation. This guide covers the key legal and regulatory considerations for businesses entering the Egyptian market.

Investment Framework: Law No. 72 of 2017

Egypt's Investment Law (Law No. 72 of 2017) establishes the primary framework for foreign investment. The law provides foreign investors with: the right to own 100% of a company in most sectors (the previous requirement for Egyptian participation has been removed in most cases); guarantees against nationalisation and expropriation without fair compensation; the right to repatriate profits, dividends, and capital in freely convertible currency; and equal treatment with Egyptian investors (national treatment principle).

The law establishes several categories of investment incentives. General Incentives apply automatically to all qualifying investment projects and include a unified 2% customs duty on equipment, machinery, and raw materials imported for the project. Special Incentives provide a tax deduction of up to 50% of the investment costs for projects established in the most underdeveloped regions of Egypt (categorised as "Sector A" regions). Additional Incentives — requiring a decree from the Cabinet of Ministers — can include allocation of free state land, reimbursement of infrastructure connection costs, and additional customs exemptions.

The General Authority for Investment and Free Zones (GAFI) is the primary regulatory body for investment, responsible for company registration, licensing, and administration of investment incentives.

Company Formation

The primary corporate legislation is the Companies Law (Law No. 159 of 1981, as amended) and the Investment Law. The most common corporate structures are: the limited liability company (LLC), requiring a minimum of two shareholders (or one for single-member LLCs) and no minimum capital requirement; the joint stock company (SAE), suitable for larger enterprises, requiring a minimum capital of EGP 250,000 (or EGP 500,000 for companies offering shares to the public); the branch office of a foreign company; and the representative office (limited to market research and liaison activities, no commercial transactions).

Foreign companies can register directly through GAFI's one-stop shop, which consolidates registration, tax registration, social insurance registration, and other administrative requirements. The process has been significantly streamlined, with GAFI targeting registration completion within 72 hours for standard applications.

Labour Law: Law No. 12 of 2003

Egypt's Labour Law (Law No. 12 of 2003) governs employment relationships in the private sector. Key provisions include: maximum working hours of 48 per week (8 hours per day, exclusive of meal breaks); annual leave of 21 days after one year of service (increasing to 30 days after 10 years of service or for employees over 50 years of age); sick leave entitlements with varying pay rates depending on duration and social insurance coverage; and maternity leave of 90 days at full pay (for employees who have completed 10 months of service), available up to three times during employment.

Termination of employment requires compliance with specific procedures. Indefinite-term contracts may be terminated with notice (varying by length of service — typically two months for employees with more than 10 years of service). Fixed-term contracts expire automatically at the end of the term. Wrongful dismissal can result in compensation awards, and the law provides for reinstatement in certain cases. End-of-service gratuity is payable at a rate of one month's salary for each year of service for fixed-term contracts (where the contract does not provide for end-of-service benefits), subject to social insurance law provisions.

Egyptianisation Requirements

Egyptian labour law requires that a minimum of 90% of the workforce of any private sector company must be Egyptian nationals, and that Egyptian employees must receive at least 80% of the total wage bill. Exemptions can be obtained for specialised positions where qualified Egyptian candidates are not available, subject to approval by the Ministry of Manpower. Foreign employees require a work permit issued by the Ministry of Manpower, typically valid for one year and renewable.

Taxation

Corporate income tax is levied at a standard rate of 22.5% on worldwide income for companies incorporated in Egypt and on Egyptian-source income for branches of foreign companies. The Suez Canal Authority, the Egyptian Petroleum Authority, and the Central Bank of Egypt are subject to a higher rate of 40%. Egypt introduced VAT in 2016 at a general rate of 14%. Withholding tax applies to various payments, including dividends (10%), interest, and royalties paid to non-residents. Egypt has an extensive network of double taxation treaties, including agreements with most GCC countries, the UK, France, Germany, and the United States.

Special Economic Zones and Free Zones

Egypt operates two types of zones offering preferential treatment. Public Free Zones — administered by GAFI — provide complete customs duty exemptions, exemption from stamp tax and registration fees, and the right to import and export without restriction. Activities within the free zones are focused on manufacturing, assembly, packaging, and services for export. Private Free Zones can be established for specific investment projects meeting minimum capital and employment thresholds.

The Suez Canal Economic Zone (SCZone) is a flagship special economic zone offering additional incentives including: a unified 2% customs duty, streamlined licensing, one-stop-shop administrative services, and proximity to the Suez Canal for logistics-intensive industries. The zone has attracted significant investment in manufacturing, logistics, and petrochemicals.

Data Protection: Law No. 151 of 2020

Egypt enacted its Data Protection Law (Law No. 151 of 2020), establishing a comprehensive framework for personal data protection. The law establishes: consent requirements for data processing; data subject rights including access, rectification, and deletion; cross-border data transfer restrictions (transfers require approval from the Data Protection Centre); mandatory data breach notification; and penalties including fines ranging from EGP 100,000 to EGP 5,000,000 for violations. A Data Protection Centre has been established to administer the law, though full operational capacity of the enforcement framework is still developing.

Dispute Resolution

Egypt offers multiple dispute resolution mechanisms. The civil court system operates under a three-tier structure. The Cairo Regional Centre for International Commercial Arbitration (CRCICA) is one of the leading arbitration institutions in the MENA region, administering cases under UNCITRAL rules. Egypt ratified the New York Convention in 1959 and enacted the Arbitration Law (Law No. 27 of 1994), which is based on the UNCITRAL Model Law. Investment disputes may also be submitted to the International Centre for Settlement of Investment Disputes (ICSID) under bilateral investment treaties — Egypt is party to more than 100 bilateral investment treaties.

GSDA Legal Consultants' Cairo office provides comprehensive legal advisory services for businesses entering and operating in Egypt, including company formation, investment incentive structuring, labour law compliance, regulatory licensing, commercial transactions, and dispute resolution. Contact our Egypt team for a market entry consultation.