Structuring a startup in Egypt: legal form, offshore holding and tax

Executive summary

• The first decision in structuring a startup is the form of the Egyptian company that carries on the business: a limited liability company with no minimum capital but no negotiable shares, a closed joint stock company with a minimum of EGP 250,000 and negotiable shares, or a single-person company with a minimum of EGP 1,000.
• An offshore holding does not take the Egyptian company out of Egyptian tax: its profits bear corporate tax, its dividends to the holding bear 10% tax, and a sale of its unlisted stakes is taxable in Egypt even when it takes place abroad.
• The holding itself may be resident in Egypt if its main or effective place of management is there (article 2 of Income Tax Law No. 91 of 2005).
• Transactions between the Egyptian company and the holding are measured at arm's length (article 30), and interest on loans and advances is not deductible beyond three times average equity up to the 2027 tax year, and twice average equity after that (article 52 and article 5 of Law No. 30 of 2023).
• A business with turnover not exceeding EGP 20 million may apply for the simplified tax regime of Law No. 6 of 2025, under which its dividends are not subject to dividend tax.

The form of the Egyptian company

The difference between a stake and a share shows when an investor comes in: shares in a joint stock company are negotiable by nature (article 2 of Companies Law No. 159 of 1981), while a limited liability company issues no negotiable shares (article 4). The Companies Law requires no particular nationality of a founder or manager, without prejudice to special laws. The detail is in Egypt's company forms and the capital each requires and Incorporating a company through GAFI.

An offshore holding

Many startups use a holding registered abroad to own the Egyptian company. Four consequences of Egyptian law remain, whatever the holding:

The Egyptian company is resident and taxable in Egypt. A juridical person is resident "if it was incorporated under Egyptian law" (article 2), and its profits bear tax at 22.5% (article 49).

Its dividends to the holding bear 10% tax with no costs deducted, or 5% where its shares are listed on the Egyptian Exchange (article 56 bis, as replaced by Law No. 151 of 2026), unless reduced by a double taxation treaty with the holding's country.

These are the standard-regime rates. Businesses registered under the simplified tax regime pay different, reduced rates computed on turnover, and their dividends are not subject to dividend tax — see the rates and conditions under the simplified tax regime.

A sale of its unlisted stakes or shares is taxable in Egypt, whether the gain arises in Egypt or abroad, and a non-resident seller must compute and remit the tax within sixty days of the transaction (article 46 bis 3, as replaced by Law No. 151 of 2026). An exit through a sale of the Egyptian company therefore carries an Egyptian tax cost that needs to be worked out at incorporation.

The holding itself may be resident in Egypt. A juridical person is also resident "if its main or effective place of management is in Egypt" (article 2). A holding registered abroad but run by its founders from Egypt faces this question before any other.

Transactions between the Egyptian company and the holding

Where related persons set terms in their dealings that differ from those between unrelated persons and reduce the tax base or shift its burden to an exempt or non-taxable person, the Egyptian Tax Authority (the ETA) may determine the taxable profit on the basis of the arm's length price (article 30). Management fees, royalties and service fees paid by the Egyptian company to the holding are therefore priced as between independent parties, and bear 20% tax on payment as amounts paid to non-residents (article 56), as set out in Egypt's withholding tax on payments to non-residents.

Funding the Egyptian company with loans from the holding has a ceiling: debit interest on loans and advances in excess of twice average equity is not deductible (article 52(1)(1), as replaced by Law No. 151 of 2026). Article 5 of Law No. 30 of 2023, however, allows the interest up to three times average equity for the tax years 2024 to 2027, and up to twice for the 2028 tax year; Law No. 151 did not repeal it. The ceiling is measured on all loans and advances, not only those from the holding. The detail is in Egypt income tax after Law No. 151.

A holding in Egypt

Where the holding is an Egyptian company, the dividends it receives from its resident and non-resident subsidiaries are exempt where its holding is not less than 25% of the subsidiary's capital or voting rights and has been held for not less than two years, or it undertakes to keep it for two years from acquisition (article 50(10), as replaced by Law No. 151 of 2026). Distributions between resident companies are also excluded from the corporate tax base and from the dividend tax base (article 56 bis).

The simplified regime and incentives

A startup whose annual turnover does not exceed EGP 20 million may apply for the simplified tax regime of Law No. 6 of 2025, under which income tax is set as a percentage of turnover rather than of net profit (article 10), its dividends are not subject to dividend tax (article 9), and its incorporation contracts and the credit facility and mortgage contracts connected with its business are exempt from the state resources development fee, stamp duty, and notarisation and registration fees (article 7). The conditions are filing returns on time and joining the ETA's electronic systems, including the e-invoice or e-receipt system as its mandatory phases require (article 3), and the regime cannot be abandoned for five years (article 5).

Projects established in line with the investment map have an incentive deducted from net profits under Investment Law No. 72 of 2017, and the window to incorporate in order to benefit closes on 28 October 2026, as set out in Egypt's investment incentives and free zones.

What this requires

• Choose the form of the Egyptian company with the funding rounds ahead in mind; of these forms, only the joint stock company issues negotiable shares.
• Where an offshore holding is used: work out the Egyptian tax on dividends and on a sale from the start, and make sure its main and effective management is not in Egypt if it is meant not to be resident there.
• Price everything the Egyptian company pays the holding at arm's length and document it, and withhold the tax on payments to non-residents when paying.
• Keep total loans and advances within three times average equity up to the 2027 tax year, and twice from 2028, so that the interest remains deductible.
• Compare the simplified regime with ordinary assessment while annual turnover does not exceed EGP 20 million.
• Incorporate by 28 October 2026 if the article 11 incentive of the Investment Law is the aim.

The firm's Corporate Legal Department structures and incorporates startups, working with the Tax Department on the tax consequences.

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.