The Arab Republic of Egypt’s strategic location at the heart of the Middle East and North Africa (MENA) region gives it a high ranking on the list of potential markets for foreign expansion. Additionally, Egypt controls the Suez Canal, which joins the Mediterranean to the Red Sea and is a vital link between Europe and the west to Arabia, India, the Far East and further into Africa.
The opportunities come with challenges – and payroll services in Egypt are among the most demanding. Whether your company is planning to move staff abroad or hire employees in the new territory, you cannot risk making mistakes operating in Egypt’s bureaucratic payroll and income tax regime – it could cost you time and money. Additionally, no more than 10% of the staff can be foreigners, and their salaries cannot generally exceed 20% of the total payroll, with exceptions applying to some Free Trade Zones.
Foreign companies intending to run the payroll for their staff in Egypt must set up a subsidiary, which involves complex registration procedures both at the corporate level and for individual employers and employees. The popular choice is to open a limited liability company for the protection it offers the parent company and its founders, shareholders and partners. Companies must have approval from the General Authority for Investment and Free Zones (GAFI) and, if involved in capital market activity, the Financial Regulatory Authority (FRA). They must comply with the Companies Law and the Investment Law.
This represents a significant commitment. Operating payroll in Egypt is complex and demands a complete understanding of company, tax and employment legislation. In addition to the state level of bureaucracy, Egypt has 27 governorates where legislation can vary.
However, there is an alternative and more straightforward option. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then implement our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities. Your new staff members can be up-and-running in days rather than weeks or months to establish a legal entity in the country.
Outsourcing payroll in Egypt will streamline your operations by dealing with the following:
- Creating an employment contract in Arabic with three copies, one for the employer, the employee and the local office of the National Authority for Social Insurance. Contracts can be indefinite or fixed-term.
- Registering employees with the relevant local authority with confirmation of contract, ID/passport, educational qualifications, Form (1) for social insurance, birth certificate and, if required, work permit.
- Registering employees with the relevant Tax Authority office of the Ministry of Finance to obtain their Tax Identification Number.
- Remitting employees’ tax and social insurance contributions by the 15th of the following month.
- Submitting all employees’ reconciliations for gross income and tax paid by January 1 of the following financial year, which is the calendar year.
- Maintaining employees’ employment records and payroll accounts and keeping them for a minimum of five years.
