Is it difficult for a foreigner to open a business in Egypt?

Have you bought an apartment in Hurghada? Are you thinking of opening a profitable business here? Surely, ideas have appeared, to bring a piece from their homeland to our sunny town or to improve the quality of services,

if you know something better than the local population. There isn’t problem.

Read carefully, now we'll tell you everything.

This country has a huge number of advantages for businessmen: low rental costs, government assistance to large investors, and the absence of any obstacles to foreign investment. But in order to properly open a business, it is important to study well the legislation of this country.

Features of business in Egypt

A distinctive feature of small business in Egypt is the availability of cheap labor among both the local population and foreigners. This is a plus only if the latter work illegally. With legal registration, it will be necessary to expand the staff to 10 Egyptian employees per foreigner and cover all insurance, the cost of which is within 500 Egyptian pounds per person, as well as to make work visas for non-Egyptian citizens. Large hotel chains can afford such expenses. Small businesses are held on contractual terms with employees. The salary is formed mainly from a percentage of the company's profit with a minimum monthly rate that varies between 1500-2000 Egyptian pounds. This option is convenient in order to save the owner's money out of season. It is very similar to the voluntary return of profits to employees. This calculation option encourages the performer to actively earn money, since it is possible to survive on 1500-2000 pounds only with the most modest expenses in their own housing.

 There are some restrictions for foreigners:

 - Foreign companies (brands) are allowed to open branches or representative offices. But it is necessary to conduct activities through an Egyptian intermediary company or an assistant. Personal mediation activities within Egypt will be prohibited.

 - The legislation of Egypt is categorical in relation to the age of the business owner – the latter must be 21 years old at the time of opening his own business. A businessman who is capable, has no mental disabilities, and has no criminal record.

 -A person who registers his own business should not work in the civil service.

 There are also certain restrictions on specific areas of business:

 - Import and activity of sales agents. To get into the register of importers, you must be an Egyptian or have lived in Egypt (taking into account the time of residence in other countries) for at least 10 years after obtaining citizenship. This is due to the desire of the Egyptian state to increase production volumes (through attracting investment), and not imports.

 How much does it cost to open a business?

 You can open your own business to a foreigner for a symbolic 5 thousand dollars, which is an order of magnitude cheaper than an identical procedure in Russia. "Turnkey business" will cost 30-40 thousand dollars, but it is very risky. Given the specifics of the city (Hurghada is very small), you need to find out the reputation of the company being purchased and study the purchasing power, if we are talking about areas related to the sale of goods. The greatest competition is in the restaurant business and the tourism sector. Acquiring a ready-made company in these areas, you will have to invest much more – about 60-70 thousand dollars.

 The procedure for registering a business in Egypt takes from five weeks to three months.

  Forms of entrepreneurship

  There are different forms of business in Egypt, but a foreigner can only open the following:

 - Private entrepreneurship. One individual is required to open an account, there is no legal need for the authorized capital. But this is not suitable for foreigners, since one of the founders must be an Egyptian citizen.

 How to get around this condition if you want to be the sole owner of the business? Only by an additional agreement with your second partner. But a person must be reliable, since you can lose a significant part of the profit if the business goes "uphill”, such a" partner” can become a real contender for your earnings, even if he does not participate in management and financial costs.

 Below is information about other forms of enterprises, but it will be of little interest to foreigners.

 - Ltd. To open a limited liability company, there must be at least 2 partners. And the total amount of the authorized capital is necessarily not less than 9 thousand dollars. No more than 2 managers can be involved in the management of the company, one of whom must be an Egyptian. It is an Egyptian who will have the status of a director.

 - JSC. For an open joint-stock company, at least 3 shareholders will be required, and the amount of the authorized capital is approximately 45 thousand dollars.

 - CJSC. The requirements identical to the previous form of ownership are sent to the closed joint-stock company. In addition, it is necessary to create a governing body (the Board of Directors), which will include at least 3 members. According to Egyptian law, members of the Board of Directors may be foreigners. General partnership. A simple form of entrepreneurship, since only 2 partners are required and there are no special requirements for the authorized capital. Limited partnership. The presence of 3 partners and the authorized capital of 45 thousand. dollars will allow you to easily open this form of business. In any type of business, one fact is important: a foreigner can own no more than 49% of the authorized capital, and 51% – from an Egyptian partner.

 Stages of business registration

 - Find a partner and a lawyer. This is a very important step. You need to trust your partner as yourself, otherwise there is a great risk of being left without benefits, profits, and even the business itself. You can do without a lawyer, but this is a very time-consuming process. Ordinary citizens will have to spend a huge amount of time dealing with documents, stand in queues for more than one day, fill out a bunch of various forms. Lawyers can speed up the procedure of a particular process, which is very important.

  - Decide on the form of business. Opening a company like an individual entrepreneur is the easiest and most reasonable thing. To open it, it will be necessary to pass the registration procedure with the tax service and obtain a permit from the Chamber of Commerce to carry out business activities. A businessman himself or a lawyer who will be engaged in business registration in Egypt must receive only 2 documents to start his own business: a certificate of registration with the tax service; a permit from the chamber of Commerce to conduct business. Together with the receipt of the certificate, a tax reporting book will be issued. The Chamber of Commerce gives permission to conduct a specific type of business activity.

  The Chamber of Commerce allocates a unique number for each of the entrepreneurs, which will be used to track their activities in the country. You must have it on hand when starting a business or provide it to a lawyer who is engaged in registration. This must be the actual address of the office, warehouse or other leased premises where the enterprise is located. The purpose of the premises must be spelled out in the documents in advance, otherwise there may be problems. The rental period is usually from 1 to 3 years. Even if there is no need for it to carry out business, it must be one way or another, otherwise registration will be refused.

  Taxation for businessmen.

 When opening your own business, the following taxes are paid:

 - for profit;

 - for rent from the cost of the premises;

 - income tax from employees ' salaries.

 The property tax depends on the rental price, so everyone, without exception, underestimates its real price tenfold. The same applies to employees ' salaries – all of them are not indicated in official documents. And in the reports for the tax service, the minimum possible values are prescribed. This is where the main problems of doing business in Egypt begin:

 -90% of any questions are solved through dating;

 - the terms of registration may be delayed, if it is regulated by the law, it is not observed;

 -more than 50% of state structures do not have computers, the registration of any papers takes a very long time, and if a document is lost, it will be extremely difficult to restore it. Even if some services have a computer database, usually many information was entered with errors from paper media, which makes it even more difficult to work;

 - spelling errors and typos in passport data are not uncommon. Check everything " on the shore” otherwise it can turn into big problems in the future.

  How much does it cost to rent a commercial space in Hurghada?

  The price depends on the location of the premises (on the main street or inside), the popularity of the area, as well as on the agreement with the owner of the premises.

 The rental period is usually 1 year, but we strongly recommend setting the maximum possible, ideally from 3-5 years. There are often cases when the landlord, seeing that the business is going well, can raise the rent two or more times.

  Below is the approximate cost of renting premises of 30 sq. m in the most popular areas of Hurghada.*

  El Hadaba.

 Central street Sheraton from $ 1500 per month

 Inner streets from $ 250 per month

 El Ahiya.

 Central Street from $ 800 per month

  Inner streets from $ 150 per month

  El Kauser.

  Central Street Promenade from $ 2000 per month

  Inner streets from $ 400 per month

  El Arabiya.

  Central street Corniche from $ 1500 per month

  Inner streets from $ 300 per month

  * Prices are approximate, the exact cost is determined by many factors.

  Starting a business in Egypt, as in any country, has certain risks and difficulties. But if you managed to formalize your entrepreneurial activity, a businessman will be able to start reaping the fruits of his labors in the shortest possible time thanks to the fertile tourist flow, which does not stop all year round.

  The main component of the success of a business in Hurghada is the quality of services provided, the right direction of activity and a well-chosen premises for rent, if the reference point is buyers from the street.

 Good luck.