Branch or Representative Office in Egypt: The Legal Difference

Executive summary

• The governing text is Book Six of the Companies Law 159 of 1981 (articles 165 to 173) and its executive regulations issued by Ministerial Decree 96 of 1982 (articles 309 to 321).
• A foreign company may carry on business in Egypt only through a branch, and the branch is a permanent establishment of a non-resident person: its profits are taxed and it must have an auditor.
• A representative office may not carry on any commercial activity. Its purpose is limited to studying markets and production possibilities; if it goes beyond that, it is struck off and may be treated as a permanent establishment.
• The General Authority for Investment and Free Zones (GAFI) charges no fee for approving a branch's registration; a representative office's registration fee is EGP 1,000, the ceiling the law sets.
• On registering a representative office, the parent company undertakes to decide within three years to incorporate a company, open a branch or have the office struck off.
• Both forms require a bank certificate for a balance equivalent to EGP 5,000 in hard currency, transferred from abroad in the case of an office.

Scope and legal basis of each form

Book Six of the Companies Law, in its two chapters, is the framework for both forms. It applies to a foreign company that does not have its centre of management or its main centre of activity in Egypt, but nonetheless has a place for conducting business there, whether a branch, an industrial house, a management office or otherwise (article 165). A company that wants a separate Egyptian legal personality — a joint-stock company or an LLC — falls outside this Book and follows the ordinary incorporation procedures.

An agency is treated as a branch where the foreign company runs it itself or through its employees, where the agent has authority to conclude contracts on its behalf, or where the agent holds its goods and disposes of them on its instructions; otherwise a commercial agent is not a branch (article 165).

What each may and may not do

No foreign company may carry on any activity in Egypt until it has established and registered a branch, failing which the branch is closed administratively (article 309 of the regulations). Contracts and acts of a branch's local manager bind the foreign company so long as they fall within the ordinary course of the branch's affairs (article 168). A branch is bound by the employment provisions of articles 174 to 176 (article 170), which include that Egyptians must make up at least 90% of its workforce and receive at least 80% of total wages, unless the competent minister grants an exception where Egyptians are not available (articles 174 and 176); and its employees are entitled to a share of its profits (article 313 of the regulations).

A representative office stops at an explicit limit:

"Foreign companies may establish in Egypt representative, liaison or service offices, or technical or scientific offices and the like, whose purpose is limited to studying markets and production possibilities, without carrying on any commercial activity, including the activity of commercial agents" (article 173).

An office that conducts an activity contrary to its purpose is struck off the register, and it may also be struck off for breaching the laws of the country or submitting incorrect information (article 319 of the regulations).

Registration with GAFI

The application for approval of a branch's entry in the commercial register goes to GAFI's Investment Services sector with the parent company's articles of association or commercial register extract, its decision to open the branch and appoint its manager, and its declaration that it has not previously opened a branch in Egypt, legalised by the Egyptian consulate abroad and the Ministry of Foreign Affairs and translated; a bank certificate for the equivalent of EGP 5,000 in hard currency in the branch's name; the lease or title deed for the premises; the contract or agreement concluded for an operation in Egypt; and the security inquiry forms. GAFI charges no fee for this service (the Authority's own Investor Services Centre guide). It issues work-permit recommendations for at most two branch managers, for a fee of EGP 1,500; anything beyond that is sought from the Manpower Directorate, in light of the legal ratio for foreign workers.

A representative office's documents are similar in substance, with a bank certificate showing a balance of at least the equivalent of EGP 5,000 in foreign currency transferred from abroad, the receipt for the EGP 1,000 registration fee, which is refunded if the office is not approved, and an undertaking from the parent company that within three years of registration it will decide to incorporate a company in Egypt, open a branch, or have the office struck off. Striking an office off requires proof that the state's dues for salary tax and social insurance have been paid.

Tax and accounting consequences

A branch does not change the foreign company's status: it remains non-resident in Egypt unless one of the residence cases in article 2 of the Income Tax Law 91 of 2005 applies, among them incorporation under Egyptian law and a main or actual centre of management in Egypt. But income from business it conducts through a permanent establishment in Egypt falls within the Egyptian tax base (article 3(d)), and the branch is expressly listed among the forms of permanent establishment in article 4, as replaced by Law 30 of 2023, alongside a place of management, an office, a factory and a workshop.

The branch is subject to the tax on juristic persons' profits (articles 47 and 48), and its profit is determined under the rules for commercial and industrial profits (article 51). Its profits are deemed distributed within sixty days of the end of its financial year, and so bear the 10% tax on dividends (article 56 bis, as replaced by Law 151 of 2026). It withholds 20% from interest, royalties and service fees it pays to non-residents and remits the tax on the first working day after the deduction (article 56, as amended by Decree-Law 101 of 2012); its share of the administrative, control and supervision costs borne by its head office abroad is not a service fee. It must have an auditor, and its financial statements go to GAFI with the auditor's report every year (auditor conditions are detailed in Statutory audit in Egypt).

A representative office, barred by law from any commercial activity, earns no income liable to profits tax. But article 4 names an "office" among the forms of permanent establishment where all or part of a non-resident's business is carried on through it, so an office that goes beyond market research exposes the parent company to its being treated as a permanent establishment. It still carries every employer's duties: withholding and remitting salary tax on its staff's pay, and paying their social insurance contributions.

What this requires

• Choosing the right form from the outset: a branch to carry on an activity in Egypt, a representative office to study the market before a later decision.
• Checking that the branch manager meets the conditions in articles 89 and 177 to 180 of the Companies Law (article 167), and having the parent company's documents legalised and translated before applying.
• Appointing the branch's auditor as soon as it is registered, not when the first balance sheet falls due.
• Computing the dividend tax on the branch's profits that are deemed distributed, and withholding 20% from taxable payments to non-residents and remitting it on the first working day after the deduction.
• Paying salary tax and social insurance for the representative office's staff on time, and keeping proof of payment, which is required for a strike-off.
• Tracking the representative office's three-year deadline and having the parent company take its decision before it lapses, as its undertaking at registration requires.
• Filing the annual notice to GAFI: within three months of the branch's financial year-end, and yearly for a representative office.

The firm's Corporate Legal Department advises on the form best suited to entering the Egyptian market and handles the registration with the General Authority for Investment and Free Zones through to the registration certificate.

Mahmoud Nassef, Founder Partner
Chartered Accountant, Ministry of Finance, Egypt

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.