Egyptian tax law defines a permanent establishment as a fixed place of business through which the business or projects of a non-resident are carried out or executed in Egypt. The definition largely follows the OECD Model and includes:
- A place of management;
- A branch;
- A building used as a sales outlet;
- An office;
- A factory;
- A workshop;
- A mine, oil field, natural gas well, quarry, or any other place for extraction of natural resources, including timber or any other forestry products;
- A farm or plantation;
- A building site, construction project, assembly, or supervisory activities related to such project; or
- An agent who has the authority to conclude contracts on behalf of a foreign enterprise.
However, the following places do not constitute a permanent establishment for a foreign enterprise in Egypt:
- Using facilities only for the storage and display of goods and merchandise owned by the enterprise;
- Maintaining an inventory of goods and merchandise owned by the enterprise for storage or display purposes;
- Maintaining an inventory of goods and merchandise owned by the enterprise only for the purpose of reprocessing by another enterprise;
- Maintaining a permanent place for the sole purpose of purchasing goods or merchandise or the gathering of information for the enterprise;
- Using a fixed place of business for carrying out of activities of preparatory or auxiliary character; or
- Using a fixed place of business solely for the purpose of the combined exercise of the activities referred above, provided that the overall activities are of preparatory or auxiliary character;
- Industrial or commercial works carried out by a foreign enterprise through a broker or a general agent on commission, or any other independent agent, unless it is proved that the broker or agent has dedicated most of its time or effort during the tax period for the interest of the foreign enterprise.
If a non-resident enterprise has control over another resident enterprise, it does not result into considering the resident enterprise as a permanent establishment of the other.
The law does not specifically define a ‘service PE’. A number of Egyptian treaties .g. those with Belgium, Uzbekistan, Bahrain] specifically provide for a service PE concept, but all of these require the physical presence of an individual for a prescribed period (ranging between 183 days and 12 months). Certain tax treaties like those with Austria, Canada, United States, United Arab Emirates, Netherlands and France do not have a specific service PE clause.