Opening a business in Sharm El Sheikh follows the national rules for company formation, tax and licensing, plus a set of rules that apply only here. Most of the costly mistakes we see come from that second layer. Presidential Decree 128/2022 governs foreign investment and property in Sharm El Sheikh. ETA Decision 484/2022 requires e-receipts from every business selling to consumers. Tourism activities need their own approvals. Below are the nine mistakes we see most, each with the rule that applies as of October 2026.
For the full process, see our page on company formation in Sharm El Sheikh and South Sinai.
Mistakes when opening a business in Sharm El Sheikh: company and property
1. Choosing a company form the decree does not allow
Presidential Decree 128/2022, in force since 1 April 2022, covers Sharm El Sheikh, Dahab and the Gulf of Aqaba tourism sector within the decree's maps. In those areas, a non-Egyptian investment project must be an Egyptian joint stock company (JSC). An LLC, the usual choice elsewhere in Egypt, does not fit. A JSC needs at least 3 founders and issued capital of at least EGP 250,000, of which 10% is paid at incorporation.
Changes of founders, shareholdings or articles of a foreign-owned JSC in these areas also need the approval of the Ministries of Defence and Interior and General Intelligence, plus GAFI or FRA. Allow for that before you plan a partner's exit or a capital increase.
2. Paying for an Egyptian "partner" you do not need
A common belief is that a foreigner needs an Egyptian partner holding 51%. Foreigners can own 100% of most investment projects in Egypt, and Decree 128/2022 states no minimum Egyptian percentage for Sharm. Commercial agency and importing for trade are the main exceptions. Our guide to the 51% and nominee myths covers this in detail.
3. Signing a property deal before the approvals
In the Decree 128 areas, land and buildings may be owned only by Egyptians or wholly Egyptian-owned entities, and state land is granted by usufruct of up to 75 years in total. Every ownership, allocation, usufruct or real-estate dealing needs the prior approval of the Ministries of Defence and Interior and General Intelligence, for Egyptians and foreigners alike. Without it, the contract is void. Have any premises contract checked before you pay.
Licences and tax setup
4. Trading before the activity licence
The Commercial Register entry makes the company exist; the tax card makes it known to the tax office. Neither lets an outlet open. Hotels, tourist restaurants and cafés, tourism companies and dive centres also need Ministry of Tourism approvals, including a separate approval for foreign staff. A shop licensed under the Public Shops Law 154/2019 may not call itself "tourist". Our licences service files these in order.
5. Taking the temporary tax card when you need e-invoices
Since 29 July 2026, Law 150/2026 allows an 8-month temporary tax card while a company finishes incorporation and licensing. It cannot be used to issue e-invoices or e-receipts. Standard commercial and service activities with a lease and possession deed get the normal 5-year card immediately. If your first client is a business, you need the normal card.
6. Opening without e-receipts
ETA Decision 484/2022 obliges every income-tax and VAT taxpayer in the Sharm El Sheikh area selling to consumers to issue e-receipts, from 1 November 2022. It applies from your first sale. Costs not documented by an e-invoice or e-receipt are not recognised for tax, so the same applies to your purchases: ask suppliers for e-invoices.
7. Misjudging VAT
VAT registration is compulsory once turnover reaches EGP 500,000, and some businesses must register regardless. Restaurants and cafés are a frequent trap: MoTA-licensed tourist restaurants charge 14% VAT, while non-tourist outlets are exempt unless, for example, they are in a mall, a compound, a tourist site or an airport, belong to a chain or known brand, sell through apps, or charge a service fee.
Staff and records
8. Underestimating payroll and foreign-staff rules
On top of salary, the employer pays 18.75% social insurance on the insurable wage (EGP 2,700 to 16,700 a month in 2026) and 4% Universal Health Insurance, which is live in South Sinai. Hiring foreigners needs a work permit, and the Investment Law 72/2017 lets projects employ foreigners up to 10% of the workforce, or 20% where qualified Egyptians are not available. Tourism employers need the Ministry of Tourism's approval as well.
9. Leaving the books for later
From tax period 2028, every business in Egypt must keep regular books, whatever its turnover (Law 150/2026). Companies formed as LLCs, one-person companies or JSCs also need an auditor and an ordinary general assembly within 3 months of the year-end. A business that opens in 2027 should start with proper books, not convert to them a year later. Our bookkeeping service sets them up from day one.
Book a free consultation before you sign anything
The cheapest time to avoid these mistakes is before the company form is chosen and before any premises contract is signed. Book a free consultation, tell us what you plan to open and where, and we set out the order of steps for your project.
