Egypt

Foreign corporations and partnerships are classified as residents of Egypt if they meet one of the following conditions:

• The entity is established according to the Egyptian law.
• The government or a public authority owns more than 50% of the capital of the entity.
• The effective place of management is in Egypt.

The executive regulations of the law indicate that Egypt is considered as the effective place of management if the entity meets any two of the following conditions:

• Daily managerial decisions take place in Egypt.
• Members of the board of directors hold their meetings in Egypt.
• At least 50% of the board members or managers reside in Egypt.
• The major shareholders (owners of more than 50% of the shares or voting rights) reside in Egypt.

Permanent establishment (PE)

The PE concept is defined in the Income Tax Law as follows:

• Headquarters.
• Branch.
• Building used as sales outlet.
• Office.
• Factory.
• Workshop.
• Places of extraction of natural resources.
• Farms.
• Building site, construction or assembly point, installations, supervisory activities of the same.
• An agent who has the power to conclude or ratify contracts on behalf of a foreign company.
• An independent broker or agent who is proven to have dedicated most of one's time during the year to the interest of a foreign company.

Recent amendments introduced by Law No. 30 have expanded the scope of the PE definition through the introduction of a minimum time threshold of 90 days, as well as the concepts of Service PE and Insurance PE, in addition to updates to the Agency PE rules. These amendments are broadly aligned with the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action 7 recommendations.

Where a foreign company’s activities give rise to a PE risk in Egypt, the company would generally be required, from a regulatory and operational perspective, to establish a legal presence in Egypt in accordance with the Egyptian Companies Law.

The Egyptian Companies Law provides for several legal forms through which a foreign company may establish a presence in Egypt, including a joint-stock company, limited liability company, branch, or representative office.