Free Zone

Free Zone Establishing a Company in Egypt : The Guide

Your definitive guide to the legal framework, tax benefits, and step-by-step process of establishing a company in one of Egypt’s strategic Free Zones.

For international companies focused on export-oriented activities, establishing a presence in an Egyptian Free Zone offers a unique and highly advantageous corporate structure. The government specifically designed these zones to attract foreign investment. They provide a package of powerful incentives and guarantees that are not available to companies operating “onshore.” However, navigating the specific regulations of each Free Zone requires expert legal guidance.

Free Zone Establishing a Company in Egypt : The Guide

At ALZAYAT Law Firm, we are Egypt’s premier international law firm specializing in corporate and Free Zone establishment. We transform the complex process of setting up in a Free Zone into a clear, strategic path. Consequently, we ensure your investment is secure, compliant, and positioned for maximum benefit. Contact us now to have the best lawyers in Egypt set up your company.

The Core Advantages of Operating in a Free Zone

Investing in an Egyptian Free Zone provides a suite of benefits designed to facilitate international trade. The General Authority for Investment and Free Zones (GAFI) regulates these zones under Investment Law No. 72 of 2017.

Key Incentives and Guarantees:

• Tax & Customs Exemption: This is the primary advantage. The government exempts all capital assets, equipment, and production supplies from customs duties and VAT. Furthermore, it also exempts all project exports from these duties.
• Simplified Taxation: Instead of the standard corporate income tax, Free Zone projects pay specific fees. For instance, manufacturing projects pay a fee of 1% of the total commodity value upon export. In contrast, service projects pay a fee of 1% of their total annual revenue.
• Full Profit & Capital Repatriation: You have complete freedom to transfer your profits and invested capital abroad at any time. The government places no restrictions on these transfers.
• Import & Export Freedom: Companies in a Free Zone do not follow the same complex import procedures as domestic companies. This allows for much smoother logistics.
• Legal Protection: The law protects your company and its assets against nationalization or confiscation. In addition, administrative authorities cannot seize your assets without a court order.
• Foreign Workforce Facilities: The government grants foreign investors and employees facilities for their residence permits in Egypt.

Permitted Activities and Types of Free Zones

The law primarily designates Free Zones for export-oriented projects. However, you can sell a certain percentage of production to the domestic market. These sales are subject to customs duties on the imported components. Permitted activities generally include manufacturing, assembly, mixing, packaging, and various export-related services.

There are two main types of Free Zones:

1. Public Free Zones: These are established industrial parks with full infrastructure. You can find them in strategic areas like Alexandria, Nasr City (Cairo), and Port Said. An investor typically leases a plot of land or a ready-built facility within the zone.
2. Private Free Zones: In specific cases, a single, large-scale project can become its own Private Free Zone. This usually requires the project to meet certain criteria, such as a high volume of exports or employing a significant number of local workers.

For more on Egypt’s investment climate, resources from the World Bank and the General Authority for Investment and Free Zones (GAFI) are invaluable.

The Step-by-Step Establishment Process

The process of establishing a company in a Public Free Zone is systematic. The Zone’s board manages it in coordination with GAFI.

The Registration Phases:

1. Project Submission & Initial Approval: First, you submit your project application to the administration of your chosen Free Zone. A committee then reviews the application for initial approval.
2. Board Approval: Following a positive initial review, the Free Zone’s Board of Directors issues the final approval for the project.
3. Land/Facility Allocation: After approval, you pay the initial rental fee. Then, the Zone administration allocates your plot of land or facility.
4. Company Incorporation: With the approval in hand, we proceed with the formal company incorporation process with GAFI. This involves submitting the Articles of Association and other legal documents.
5. License to Operate: Once we incorporate the company and you provide necessary guarantees, the Zone’s chairman issues the final license to operate.
6. Final Registrations: Lastly, you must complete all necessary registrations, such as with the Commercial Registry and the Social Insurance Authority. Our team handles this process seamlessly.

Why Partner with ALZAYAT Law Firm?

Our firm provides unparalleled expertise in navigating the complexities of each specific Free Zone. We recognize that each client’s goals are unique. Therefore, we emphasize transparent communication to build bespoke legal strategies that align with your objectives.

Our excellence is not just a claim; it is recognized internationally. Leading legal directories such as The Legal 500, hg.org, and Global Law Experts consistently rank our specialists as industry leaders. This affirms our unwavering commitment to providing top-tier legal counsel every step of the way.