Setting Up a Sole Proprietorship in Egypt: A Complete Guide

Egypt comes with a long history that traces its heritage back to the 6th to the 4th millennia BCE. Currently, it is a dynamic economy witnessing decent growth and stability. The country offers low labor costs, a skilled working force, and a strategic geographical position.

The Egyptian population stands at 90 million, half of which is under 30 years.  Besides being tech-savvy, Egypt is a rapidly-growing entrepreneurial market globally. 

Egypt has the potential to turn into a top emerging market poised to offer great returns on foreign investment thanks to a booming economy. The country attracts FDI because of being part of the Egypt-EFTA Agreement, the EURO-Med Partnership, and the Greater Arab Free Trade Area (GAFTA). Egypt’s taxation regime is comprehensive regarding the types of taxes and the areas covered. 

The top strengths of the market in Egypt are-

• Young workforce 
• Suez Canal is a hub for the global maritime traffic
• Welcoming location at the crossroads of Africa, Europe, and Asia
• Ongoing government investments and support
• Sustainable and low costs of doing business

Anyone can expand their business in Egypt following the local rules and regulations. In Egypt, a prevalent form of small business enterprise is a sole proprietorship. It protects the owner or investor from significant risks and comes with limited liability. Read on to understand the process of establishing a sole proprietorship in Egypt.  

Who can be a Sole Proprietor in Egypt? 

A sole proprietorship is a one-person trading entity that an individual owns and is controlled by a single person. As sole proprietors, you enjoy the profits of the business activities.

There are no particular eligibility criteria to be a sole proprietor in Egypt. You must register a sole proprietorship in Egypt while ensuring that your identity documentation is in order.

Setting up a sole proprietorship in Egypt is not complicated. According to Egyptian law, you can start a sole proprietorship in any business domain. However, the central authority for any company establishment, including a sole proprietor entity in Egypt, is the General Authority for Investment and Free Zones. Get well-versed with all applicable rules to incorporate a sole proprietorship in Egypt before setting up your business there.

Benefits of Sole Proprietorship in Egypt

Setting up a sole proprietorship in Egypt is the easiest way to enter the Egyptian market. It offers various benefits, which include: 

Simple ownership

In a sole proprietorship, owning a business is simple as it involves no additional elements like the company offers. The owner has complete control over decision-making and finances. Sole proprietors are free to control and operate their businesses as they wish. 

Easy to step up

Setting up a business involves several stages of compliance with Egyptian law. Opting to start a sole proprietorship is typically the simplest way to launch a business in the country. It requires less paperwork, and company owners can focus more on business expansion.

Liberty and flexibility to owners  

A sole proprietorship is a single-handled company wherein only one person is involved. Hence, this provides greater flexibility and liberty to the owner. The decision-making is entirely in their hands, and they get flexibility in operations. 

Documents Required for Registering Your Business in Egypt

The documents needed for registering a sole proprietorship in Egypt are as follows: 

• Power of attorney copy from the firm’s owner if incorporated via an agent. A power of attorney needs to stipulate the establishment of companies.
• Photo identification of the owner. This means the national number for an Egyptian and a passport for foreigners.
• Photo identification for an agent 
• Security form of inquiry for the owner of a foreign facility. 
• Approval of competent authority (Commercial Registry) when the proprietorship purposes require obtaining permission per provisions of applicable laws 
• In the event of the in-kind share during incorporation, you must submit the evaluation report on this in-kind share from an expert regulated by law.
• Approval to set up proprietorship in the free zone, if relevant
• Banking certificate of deposit
• Auditor certificate
• Deed of possession for headquarters of the company or a lease contract

Other Criteria for Registering a Sole Proprietorship in Egypt

When starting a sole proprietorship in Egypt, here are some things to keep a tab on-

• Investors can establish sole proprietorships where companies are mandated to register in a commercial register with a regulatory authority, the General Authority for Investment and Free Zones. 
• Companies law sets forth all rules for inclusion in companies’ articles for the association. 
• The minimum capital for a sole proprietorship is 1000 EGP. 
• As per the law, any person who wants to trade as a sole proprietor is 21 years old and completely qualified.

1. 1. Registration processes will be completed via the General Authority for Investment.
   2. This incorporation process is accessible through all branches of the General Investment Authority across the governorates of the Republic. 

Post-Registration Compliances

Once the proprietorship incorporation is completed, there are a few things that you need to undertake before you begin any business activity-

• Tax registration-Register your sole proprietorship at the Tax Office at GAFI.

• Obtain permits or licenses- You will require permits or licenses to commence operations. 

Taxation

• If the sole proprietorship has an annual turnover of more than EGP 500,000, a VAT certificate is mandatory.
• To obtain this VAT Certificate, submit the following documents to the Tax Authority-

1. 1. Article for association
   2. Commercial registration
   3. Employer-issued POA 
   4. A lease contract valid for one year with the date specific from Notary Public
   5. Tax Card

• Egypt’s standard rate for VAT is 14%.

How to Register a Sole Proprietorship Firm in Egypt?

The procedure to register a sole proprietorship in Egypt includes simple steps. Find out how to register a sole proprietorship in Egypt here:

Step 1: Name clearance- 

• Before any company can initiate its business, it must obtain a name clearance from the commercial registry. 
• A proposed name for the proprietorship must be unique and not conflict with an existing name.

Step 2: Application and document submission- 

• Register and then create your account plus workspace on gafi.gov.eg.
• The application for the proprietorship registration with all documents must be sent to the Companies Establishment Department under the GAFI. 
• The authority reviews all documents and the application.
• The documents are all returned to the workspace you registered on the mentioned portal.
• You can solve any issues with a call to the hotline number 16035 between 8 am and 8 pm Cairo time or by sending an email to e-services@gafinet.org.eg

Step 3: Obtain the incorporation certificate- 

• When the application is filed and the authority ratifies the submitted documents, it will issue an incorporation certificate for establishing the proprietorship.

Step 4: Corporate banking account- 

• You must open in the proprietorship’s name a corporate bank account for a sole proprietorship in Egypt. 
• All the financial dealings of this company must be done via this bank account.

Service fees

• Registration on the commercial registry is chargeable by 9.5 pounds, and for the case of a branch, this registration fee in the commercial registry comes for an additional 60.5 pounds.
• For issuance of a practicing certificate, the annual subscription fee stands at two per thousand of capital with a maximum of 2000 EGP and a minimum of 24 pounds and 100 pounds added in return for the certificate.
• Electronic payment modes are available, as is cash payment at the Investor Service Center.

Conclusion

Sole proprietorship in Egypt has simple and specific requirements for capital and charges. Business owners can set up a sole proprietorship in Egypt and opt to explore new business opportunities. 

Payroll management becomes a challenge as you grow teams and hire employees in Egypt. This is where you can collaborate with Multiplier. 

Multiplier is a global employment solution for sole proprietors worldwide. We offer reliable EOR solutions to ease your recruitment and management process of international employees. You can manage your freelancers with our one-click payroll, which helps pay freelancers. All our services comply with local norms while establishing a sole proprietorship in the country.