Egyptian law imposes corporate taxes on all joint stock companies, limited liability companies, partnerships limited by shares, foreign companies and branches of foreign companies headquartered abroad.
The standard corporate tax rate is 40% (40.55% for companies involved in petroleum extraction and production). A 32% tax rate is applied to earnings from export operations and from earnings generated from industrial activities.
The corporate tax system compensates for what initially seem like crushing rates through a bevy of deductions and exemptions.
Almost all business expenses are tax-deductible, including employer contributions to social insurance and health care schemes. Joint stock companies employing more than 50 people with accounts in good standing are eligible for a five-year tax holiday. Bad debts that have been written off are deductible, and losses may be carried forward against profits for up to five years.
Businesses operating in a Free Zone (such as the Suez Free Zone or Alexandria Free Zone) are 100% exempt from Egyptian taxes and import duties. Like so many areas of the Egyptian economy, the exact rules governing Free Zone activities are in a state of flux. The government has already begun removing energy subsidies for energy-intensive industries (e.g. cement and fertiliser manufacture) located in the Free Zones, and plans to remove subsidies for non-energy-intensive industries shortly. Make sure you check with the General Authority for Investment (GAFI) and your lawyer about your tax status before you begin operations.
Egypt has negotiated a free-trade agreements for certain goods exports with both the EU and US, and is a member of numerous bilateral trade agreements with other African and Arab countries.
You will be charged an import duty on all goods that come to Egypt via air freight. Importing goods is not cheap (though plans for the reduction of import tariffs are in the works), so do your best to make use of domestic suppliers whenever possible.
Take particular care if your business will depend on food imports to operate. The Egyptian government’s food import regulations are notoriously brutal. Companies importing meat, for example, must hire inspectors to check all meat before it enters Egypt – until the meat is certified as safe it is kept in quarantine at the importer’s expense. There is no way around this process, even if the meat was inspected in its country of origin. If your business will rely heavily on food imports, you should make sure to have plenty of capital to spare.