Steps To Set Up a Business in Egypt’s Public Free Zones

Learn how to register and operate your business in Egypt’s public free zones. Let us walk through the application steps, fees, licenses and guarantees required for investors in public free zones.

Egypt’s public free zones have become a central part of its industrial and trade policy. They are overseen by the General Authority for Investment and Free Zones (GAFI) and offer an attractive package of exemptions and incentives.

This is Part 2 of the series on doing business in Egypt’s public free zones.

Read Part 1 of the article: Egypt’s Public Free Zones Explained: Tax Breaks, Exports, and Investor Benefits

Filing the initial application

The process starts with submitting a project establishment notification form to the management of the relevant zone or sector. The form must be accompanied by identification documents of the partners, either national ID cards or passports, as well as powers of attorney issued by the partners or parent company.

For industrial projects, the application requires some technical disclosures. Investors must provide an overview of land use, machinery and equipment to be installed, production lines, input and output materials, and a description of the final product. The application is submitted with a fee of EGP 500 (US$10.3).

A timetable is also required which should have an outline of the construction phase, installation of production lines, and the projected start of operations.

Investors must confirm in an undertaking that if the project fails to meet industrial criteria, it will be treated as a storage project, and that all details provided in the application, including the timetable and industrial process descriptions, are binding.

For projects in media free zones, firms need to walk an additional step. They should get get aa r preliminary approval from accredited infrastructure companies in the zone to rent studios, administrative offices, or satellite hours.

Final approval and security clearance

Once the documentation is reviewed, GAFI issues initial approval to proceed. After this stage to get a final approval, the investor must submit a cheque worth 10 percent of the usufruct fee for one year, with a minimum of US$1,000. The cheque serves as an advance payment for the required area and ensures commitment to implementation.

If the investor fails to submit the cheque within one month from the date of notification, the application is filed, and the initial approval is cancelled. The advance is deducted from the final usufruct fee once the land is received. But it is non-refundable, if the project is not implemented for reasons attributable to the investor.

Final approval needs further some clearances, especially for projects with foreign participation. A security clearance is required for each foreign partner, for which applicants should submit their passport details. Security checks are also necessary for foreign members of boards of directors in joint stock companies and for directors of limited liability companies.

The final approval decision specifies that if clearance is denied for any partner or shareholder, the investor must replace the individual within one month of notification. Failure to comply is treated as withdrawal from the project, with no right to claim compensation. Investors should provide a written undertaking to accept this condition.

An exception exists for media free zones, where zone authorities handle security clearances directly for both Egyptian and foreign partners. In these cases, board-level clearances are deferred until partner-level approvals are complete.

Following security clearance, investors are notified of final acceptance and granted one month to receive their allocated site after paying the usufruct fees for one year in advance.

Issuing the operating license

After final approval and site handover, investors must complete the requirements for an operating license. They need the following documents:

• Contract of incorporation, drafted using Investors Services Center (ISC) forms;
• Copy of the decision authorizing incorporation and the legal representative’s credentials;
• A letter of guarantee in GAFI’s name, tied to the type of activity and investment cost;
• Proof of registration in the commercial register and a copy of the tax card; and
• Evidence of payment of the remaining usufruct fees for the first year.

Initially, GAFI issues a temporary license valid for one year, which may be renewed. A permanent license is only granted after all facilities are completed in line with approved drawings, and once clearances are obtained from civil protection, environmental, and other authorities.

For industrial projects, GAFI inspects production lines to ensure they match the data provided in the application and then classifies the activity as industrial production. As we have seen above, non-industrial projects that fail to meet these criteria are treated as storage projects for financial purposes.

Application for professional or craft activities

Entrepreneurs intending to operate a profession or craft within a public free zone must first submit a formal application that specifies the activity type and the required space. Along with the application, they need these supporting documents: a copy of the commercial register, a tax card, construction drawings, and a timetable for completing construction and furnishing.

The applicant must also provide financial instruments at this stage. A bank cheque equal to the usufruct fee for the first year, set at US$25 per square meter, is payable in advance.

An irrevocable letter of guarantee must be also issued in favor of the GAFI, valued at half the usufruct fee. Investors then sign an undertaking to follow the agreed project timetable.

Once submitted, the zone administration issues approval for the activity. Within 60 days of receiving notification, the applicant must complete the payment of an annual EGP 500 fee and supply all required documents. If the deadline passes without compliance, the approval lapses automatically and the initial payment is non-refundable.

After completing these steps, the investor receives the allocated space and signs a delivery report for the site. The license to operate the profession or craft is then issued and remains valid for three years, after which it must be renewed.

Financial obligations of free zone projects

Beyond application fees, investors must budget for ongoing financial commitments to maintain their presence in the zone.

When submitting an application for a new project, investors are required to pay 10 percent of the usufruct fee as a commitment fee, with a minimum of US$1,000. It is to demonstrate seriousness of intent and is later deducted from the total usufruct fee once the land is allocated. If the project is not implemented for reasons attributed to the investor, the amount gets forfeited.

Upon receiving final approval, the investor is granted access to the allocated land within one month. At that time, the balance of the usufruct fee for the first year must be paid in advance. The category of rent is determined by GAFI’s Board of Directors and may differ depending on project type and location.

Financial guarantees for project liabilities

Every project in a public free zone must provide a financial guarantee to GAFI before receiving authorization to begin operations. The guarantee ensures that liabilities arising from project activities can be covered. The guarantee is capped at 2 percent of total investment costs but is calculated differently depending on the project’s nature:

• Industrial and assembly projects are required to provide 1 percent of their investment costs, up to a ceiling of US$75,000 or its equivalent in foreign currency; and
• Storage and service projects must provide 2 percent of investment costs, with a cap of US$125,000 or equivalent.

The value of this guarantee is reassessed every three years based on the latest audited financial statements and accounts of the companies.

In short

Egypt’s public free zones can help investors expand their export-focused businesses with minimal steps needed for registration. The GAFI, as a one-stop platform, helps in expediting the application submission, licensing, payment of fees, and security oversight. So, the businesses that maintain accurate records and ensure projects deliver on export and foreign currency targets can benefit from the business-friendly environment of public free zones and avail state-led incentives of operating in public free zones.

Read more: Egypt Eliminates Capital Gains on Stock Transactions: Implications for Investors

(US$1 = EGP 48.25)

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