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The Legal 500 EMEA

Establish Offshore Companies

شركات الأوف شور - offshore company

Egypt is considered one of the most attractive destinations for investment. And hence, all investors, startups, and small businesses all over the world who want to open and register a company in Egypt recognize that there is a great investment environment.

The Companies’ Law No. 159 of the year 1981, the New Investment Law No. 72 of the year 2017, and the Capital Market Law with their Executive Regulations and adaptation are the governing laws that regulate and manage the establishment of a company in Egypt from the beginning until its dissolution. Meanwhile, the central authority governing all types of companies in Egypt are the General Authority for Investment and Free Zones.

Types of companies in Egypt

The most widespread types of companies in Egypt, under Law No. 159 of 1981, are as follows:

  1. Joint Stock Company (JSC).
  2. Limited Liability Company (LLC).
  3. Branch of a Foreign Company.
  4. One Person Company.

1- Joint stock company

An Egyptian joint stock company may be a closed company or a listed company, where the liability of its partners is limited to the value of their shares in the company.

  • Registration:

A joint stock company must be registered in the Commercial Registry and is subject to the supervision and control of GAFI.

  • Management and Control:

There must be at least three partners.

2- Limited Liability Company (LLC)

An Egyptian limited liability company is a closed company where the liability of each of its partners is limited to the value of their shares in the company.

  • Capital:

The minimum share capital required to form an LLC is 1000 LE.

3- One Person Company

One Person-Company is a company that is owned by a single person, whether natural or legal, within the purposes that it is established for, and the owner of the company shall be liable only for the company’s obligations unless within the allocated shared capital.

  • Capital:

According to the last amendment on the article No.287 The amount of 1000 EGP (minimum capital) must be paid in full during the incorporation process of the company.

The meaning of offshore company

A company incorporated for the purpose of operating outside the country of its registration. for the purpose of tax avoidance or to enjoy relaxed regulations. Tax avoidance allows a person or business to lower the amount of income tax owed by legal means by claiming permissible deductions and credits.

Offshore Companies can also be used for illicit purposes, such as money laundering and tax evasion. Tax evasion is illegal because it allows a person or business to intentionally avoid paying taxes.

Types of offshore company

  • International Business Company: IBCs are the most popular offshore companies.
  • Offshore Corporation: A more general offshore company type.
  • Offshore LLC: Offshore limited liability company or Zero tax companies.
  • Private Foundation.

How to offshore company incorporation

1- Documents for Offshore Company Incorporation

  • The Certificate of Incorporation issued by the local registrar.
  • The Memorandum and Articles of Association.
  • A company legal address.
  • The share certificate(s).
  • The decision related to the hiring of the director(s) and the distribution of shares.
  • A dedicated account manager for a year.

2- Opening offshore bank account

  • Choose a banking jurisdiction in line with your corporate strategy and banking requirements.
  • Submit the documents required for the bank account, whether in-person or online.
  • Once the mandatory process of identifying and verifying the client’s identity when opening an account and periodically over time. and account creation completes, the company can deposit money into the offshore account.
  • Make note of the reporting requirements, if any.

Advantages of establishment offshore company

  • Low Tax:

One of the main benefits, and possibly the most talked about one, is tax. All business owners are always looking for ways to reduce their taxes, as this area of a business can become the biggest burdens.

Generally, offshore companies are tax-exempt or pay little tax in the country of incorporation. For example, many beneficial owners use offshore companies as holding companies, to receive dividends.

  • Advantages related to the property:

Advantages of offshore property ownership include avoidance of many taxes, including inheritance tax, income tax, capital gains tax and much more.

  • Asset protection:

One of the primary benefits of incorporating an offshore company is the protection of assets. Offshore companies operate by creating a separate legal entity in a jurisdiction with strong asset protection laws. This separation allows the company to shield personal assets from potential lawsuits or creditor claims.

  • Increased privacy:

Incorporating an offshore company not only offers potential tax savings, but can also provide increased privacy protection for business owners. One of the main advantages is the ability to appoint a nominee director and shareholder, which can limit public disclosure of the names of the actual owners.

This extra layer of privacy protection can be crucial for entrepreneurs who value confidentiality in their business dealings.

Disadvantages of establishment offshore company

  1. There are laws prohibiting any trade activity or services to be carried out on the mainland of that jurisdiction in certain cases.
  2. The business won’t be allowed to rent a local property.
  3. There are legal fees (high in certain cases) involved in establishing and incorporating an offshore company.
  4. There is certain minimum limit set out for investment in the companies.
  5. The host country (jurisdiction) could require the investors to own property in the country.