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03 December 2018

Egypt establishes controls for representative offices

On 13 November 2018, Egypt’s General Authority for Investment and Free Zones (GAFI) issued Decision No. 742 of 2018, which establishes controls for representative offices in Egypt.

Under Article 319 of the Executive Regulations of the Companies Law, foreign companies may, with the approval of GAFI, establish representative offices in Egypt to conduct market studies and research.

GAFI has issued rules relating to the oversight of representative offices:

  • At the start of each year, representative offices must submit a statement including:
    • For employees, their names, functions, nationalities, compensation, and the percentage of salaries paid to Egyptians.
    • Work that will be initiated during the year.
    • Changes to the activities of the representative office.
    • Decisions by the head office about expected future operations in Egypt.
    • Timetable for completing remaining studies, and for providing a statement of the conclusions and proposed actions following those studies.
  • Foreign companies that establish a representative office should establish a company or branch in Egypt within three years of registering the representative office.
  • The registration period for representative offices is a maximum of one year. However, the registration will be renewed annually, provided the representative offices complies satisfactorily with the annual statement submission.
  • Representative offices must restrict their activities to conducting market studies and research. Foreign companies that violate this restriction should establish a subsidiary or branch within six months from being notified of the violation. If this is not done, GAFI may cancel the registration of the representative office.

Foreign companies that have representative offices in Egypt should note the compliance requirements and confirm that their operations are within the permitted scope for representative offices.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Egypt), Cairo
  • Sherif El-Kilany | sherif.el-kilany@eg.ey.com
  • Ahmed El-Sayed | ahmed.el-sayed@eg.ey.com
  • Hossam Nasr | hossam.nasr@eg.ey.com
  • Ahmed Abo El Fotouh | ahmed.aboelfotouh@eg.ey.com
  • Maissa Zidan | maissa.zidan@eg.ey.com
  • Nesreen Maher | nesreen.maher@eg.ey.com
  • Hany El-Gamal | hany.el-gamal@eg.ey.com
Ernst & Young LLP, Middle East Tax Desk, Houston
  • Gareth Lewis | gareth.lewis1@ey.com

ATTACHMENT

Document ID: 2018-6391

 
 

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