Corporate Taxation in Egypt: A Practical Guide for Startups

If you’re building a startup in Egypt, you’re likely structured as a joint-stock company (JSC), limited liability company (LLC) or one-person company (OPC). These legal entities offer flexibility and credibility—but they also come with specific tax obligations.

At Ebaa Law Office, we work closely with founders and early-stage teams to help them understand their tax responsibilities and make smart, lawful choices that reduce financial strain. This guide breaks down the key tax types that apply to startups and shares practical planning tips to help you stay compliant and efficient.

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Egypt’s tax system applies several types of taxes to companies. Understanding these from day one can help your startup avoid penalties, manage cash flow, and grow sustainably.

1. Corporate Income Tax

Startups that generate profits are subject to corporate income tax under Article 47 of Law No. 91 of 2005:

“A tax of 22.5% is imposed on the net annual profits of legal persons.”

Whether you’re offering fintech services, investment advice, or digital lending, this tax applies once your company is profitable.

2. Dividend Tax

If you distribute profits to shareholders, Article 53 (bis) imposes a dividend tax:

“A 10% tax is imposed on profit distributions, reduced to 5% in certain ownership cases.”

Many early-stage startups choose to reinvest earnings into the business to avoid this tax and fuel growth.

3. Stamp Duty

Under Stamp Duty Law No. 111 of 1980, your startup may owe stamp duty on:

• Founders’ agreements
• Loan contracts
• Marketing or banking documents

Rates vary depending on the document and transaction type.

4. Value Added Tax (VAT)

Per Law No. 67 of 2016, most services are subject to a 14% VAT, unless specifically exempt.

You’ll need to:

• Register for VAT
• Charge VAT where applicable
• File monthly VAT returns

Certain financial services may be VAT-exempt—something we can help clarify based on your business model.

5. Payroll Tax & Social Insurance

If you’re hiring employees, you’re required to:

• Withhold income tax from salaries
• Contribute to social insurance (employer and employee portions)

This is regulated under Law No. 148 of 2019. Even if your team is small now, it’s important to get this right from the start.

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Paying tax is part of doing business—but startups have options. Here are several strategies we regularly help clients use to stay lean and lawful:

1. Deduct Business Expenses

Egyptian law allows you to deduct operational costs from your taxable income, including:

• Rent and co-working fees
• Staff salaries
• Digital tools and marketing
• Utilities and professional services

Make sure expenses are documented and clearly tied to your business.

2. Use Accelerated Depreciation

If you invest in tech infrastructure or equipment, you may be able to depreciate assets faster—reducing your taxable profit in the short term and improving cash flow.

3. Reinvest, Don’t Distribute

Rather than paying dividends, consider reinvesting profits. You’ll avoid the dividend tax and strengthen your capital base—vital for early-stage startups trying to scale.

4. Structure Thoughtfully

If your startup has multiple revenue streams (e.g., lending, digital wallets, and advisory services), consider setting up different entities for each. This can provide better financial control—but should be planned carefully with legal support.

5. Tap Into Investment Incentives

Investment Law No. 72 of 2017 offers incentives to qualifying projects, including:

• Temporary tax exemptions
• Customs duty relief
• Land allocation advantages

These can dramatically improve your financial runway if you qualify.

6. Lease, Don’t Buy (Yet)

Leasing office space or equipment may be more tax-friendly in the early stages. Lease payments are usually deductible, while purchased assets must be depreciated over time.

7. Finance with Loans

Raising funds through debt instead of equity has a tax upside: interest payments on loans are deductible, but dividends are not. If you’re weighing funding options, this is worth considering.

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As a startup founder, understanding your tax obligations is essential—not just to avoid issues, but to give your business room to grow. With the right legal guidance, you can stay compliant, reduce risk, and build a tax-efficient structure that supports your long-term goals.

At Ebaa Law Office, we help startups do just that. Whether you’re launching, scaling, or restructuring, our team is here to support your growth—legally and strategically.