Establishing Foreign Branch

Establishing a Foreign Branch in Egypt

Your definitive guide to the legal, financial, and strategic steps for foreign companies entering the Egyptian market.

For global enterprises, the process of establishing a foreign branch in Egypt provides a powerful framework to execute specific, contract-based projects. This structure allows you to operate as a direct extension of your global brand, thereby avoiding the complexities of creating a new legal entity. However, the path is governed by precise regulations that demand expert navigation.

At Alzayat Law Firm, we are Egypt’s leading international law firm specializing in foreign investment. Our role transcends simple legal processing. Instead, we provide the strategic counsel necessary to transform this complex undertaking into a clear advantage for your business. Ultimately, we ensure your market entry is not just compliant but also optimally structured for success.

Legal Framework for Establishing a Foreign Branch in Egypt

First, it is crucial to understand a branch’s legal identity. A foreign branch is not a subsidiary; instead, it is the parent company itself, operating directly on Egyptian soil. Two key pieces of legislation primarily govern this structure:

Governing Legislation:

• The Companies Law No. 159 of 1981: This foundational law provides the legal basis for corporate structures, including the rules permitting a foreign company to register a branch.
• The Investment Law No. 72 of 2017: This modern legislation streamlines procedures to encourage foreign investment. Consequently, this law empowers the General Authority for Investment and Free Zones (GAFI) as the central administrative body.

Checklist for Establishing a Foreign Branch in Egypt

A successful application hinges on the meticulous preparation of documents. Our team of Top corporate lawyers in Egypt manages this entire chain of custody to ensure flawless execution.

Required Documentation:

1. The Secured Contract: You must first provide an executed copy of the contract that necessitates your company’s presence in Egypt, as this is the foundation for GAFI’s review.
2. Authenticated Parent Company Documents: This multi-step “legalization” process involves several key stages. First, you must have the company’s incorporation certificate and bylaws notarized in their country of origin. Next, the relevant foreign affairs ministry must certify them. Finally, the Egyptian Embassy in that country provides the ultimate legalization.
3. Official Arabic Translation: Following legalization, a government-accredited service must translate all the above documents into Arabic.
4. Board of Directors Resolution: You will need a formal, signed resolution from the parent company’s Board. This document must authorize the decision to open a branch and explicitly appoint a Branch Manager.
5. Power of Attorney (PoA): The parent company must issue a comprehensive PoA to the Branch Manager, legalized in the same manner as the corporate documents. This PoA grants the manager authority to register the branch, open bank accounts, and represent the company before all government bodies.
6. Bank Certificate: You need an official letter from an accredited Egyptian bank confirming the transfer of at least 5,000 EGP (or its equivalent) to open the branch’s initial account.

The Four-Phase Establishment Process

We manage the entire administrative journey through a structured, four-phase approach to ensure clarity and efficiency.

Phase 1 of Establishing a Foreign Branch in Egypt: Security Clearance

First, we file an initial application to obtain security clearance for the parent company and the proposed foreign Branch Manager. This is a standard, non-discretionary step for all foreign operations in Egypt.

Establishing a Foreign Branch in Egypt Phase 2: GAFI Application and Review

After receiving clearance, we submit the complete, legalized, and translated dossier to GAFI. At this stage, GAFI’s legal department meticulously reviews the file to ensure all documents are in order and that the branch’s activities align with the contract.

Phase 3: Commercial and Tax Registration

Upon receiving GAFI’s certificate of approval, we immediately register the branch with the Commercial Registry. This action officially records the branch in Egypt’s commercial database. Concurrently, we register the branch with the Egyptian Tax Authority to obtain its unique Tax ID number.

Phase 4: Finalizing Operational Readiness

Finally, we complete the process by registering the branch and its employees with the Social Insurance Authority. We also assist in securing a physical office and ensuring all necessary operational licenses are in place, making the branch fully and legally operational.

Strategic and Operational Considerations

Branch vs. LLC: Making the Right Choice

This upfront analysis is a critical strategic decision when establishing a foreign branch in Egypt. While a branch is ideal for contract-based work, an LLC may be better for open-ended commercial activities. For instance, a branch is faster to set up and has no major capital requirements, but its activities are restricted. In contrast, an LLC offers broader operational freedom but involves a more complex setup. We help you analyze your business goals to make the optimal choice.

Ongoing Compliance Obligations

Operating a branch carries specific annual responsibilities. These include:

• Tax Filings: The branch must pay a 22.5% corporate income tax on its net profits and file regular tax returns. We provide expert analysis of any applicable double-taxation treaties to mitigate these burdens.
• Audited Financial Statements: A licensed Egyptian auditor must audit the branch’s annual financial statements. Afterwards, you must submit these statements to both the tax authority and GAFI.
• Social Insurance Contributions: The branch must make monthly contributions for all registered employees to the Social Insurance Authority.