Why Egypt?
Egypt is one of the most attractive industrial hubs in the Middle East and Africa. With a population of more than 110 million, competitive labor costs, and a central location connecting Europe, Asia, and Africa, Egypt provides strong opportunities for export-oriented industries.
The government also offers investment incentives, free zones, and protection under international treaties.
Legal Requirements to Establish a Company in Egypt
Foreign investors must establish a legal entity in Egypt before starting a factory. The process is managed by the General Authority for Investment and Free Zones (GAFI).
Common legal structures
- Limited Liability Company (LLC): Flexible structure, suitable for small to medium factories.
- Joint Stock Company (JSC): Required for larger projects with higher capital.
- Branch of a Foreign Company: Allowed if linked to a contract with an Egyptian entity.
- Free Zone Company: Located inside free zones, with tax and customs exemptions.
Capital Requirements
- LLC: No strict minimum, but usually EGP 50,000 – 100,000 is recommended.
- JSC: Minimum EGP 250,000 (10% paid at incorporation).
Main steps with GAFI
- Prepare Articles of Association, shareholder documents, and notarized powers of attorney.
- Submit the file to GAFI’s Investor Service Center in Cairo.
- Obtain commercial registration and tax card.
- Register with the Chamber of Commerce.
- Apply for the industrial license from the Industrial Development Authority (IDA).
Importing Raw Materials – Turkey vs. China
Importing from Turkey
- Egypt and Turkey have a Free Trade Agreement (2007).
- Industrial products are exempt from customs duties if accompanied by a valid EUR.1 certificate of origin.
- VAT (14%) still applies on imports at customs clearance
Importing from China
- No free trade agreement with Egypt.
- Imports are subject to standard Egyptian customs tariffs (0%–40% depending on HS code).
- 14% VAT applies on customs value + duty.
Customs Options for Manufacturers in Egypt
Factories that import raw materials for re-export can benefit from
- Temporary Admission (Inward Processing): Customs duties are suspended on imported raw materials if the final products are exported.
- Drawback System: Refund of customs duties paid on imported materials once the finished goods are exported.
Taxes and Incentives
- Corporate tax: 22.5% on net profits.
- VAT: 14% on most products.
- Free Zones: Companies enjoy exemption from corporate tax, VAT, and customs duties.
- Investment Law incentives: Reduced land prices, customs exemptions on machinery, and priority access to utilities for export-oriented industries
Practical Roadmap for a Foreign Investor
- Decide on the structure (LLC, JSC, or Free Zone).
- Register the company through GAFI.
- Secure land or factory space in an industrial zone or free zone.
- Obtain the industrial license and environmental approvals.
- Import raw materials from Turkey (EUR.1 certificate) or China (standard duties).
- Benefit from temporary admission or drawback for export operations.
- Ensure compliance with tax and customs reporting.
Conclusion
Setting up a factory in Egypt is straightforward with the support of GAFI. Investors can benefit from:
- Competitive labor and production costs.
- Strategic access to Europe, Africa, and the Middle East.
- Customs exemptions when importing from Turkey under the free trade agreement.
- Export incentives under Egypt’s investment and customs laws.
By following the legal framework and using the right customs regimes, foreign companies can establish a successful and profitable manufacturing base in Egypt.
Required Documents Checklist for Setting up a Factory in Egypt
When establishing a company in Egypt through GAFI, foreign investors usually need the following
- Passport copies of all foreign shareholders and managers (valid and notarized).
- Power of Attorney (POA) for the lawyer handling the incorporation in Egypt (notarized + legalized by the Egyptian consulate).
- Articles of Association / Memorandum of Incorporation (draft prepared by the lawyer).
- Bank certificate showing the deposited share capital (for JSC).
- Proof of address for shareholders (utility bill or equivalent).
- Lease contract for the factory premises (registered or notarized).
- Industrial license application from the Industrial Development Authority (IDA).
- Tax registration request for corporate tax and VAT.
- Customs registration if the company will import raw materials or export finished products.
- Environmental approval (for industries with environmental impact, e.g., chemicals, metals).