Due to the inefficiency rampant in most administrative offices, it is highly unlikely that anyone from the Egyptian government will ever follow up on your visa status (unless you are foolish enough to get yourself arrested). If you overstay your tourist visa by several months you may pay a fine and renew it for a near indefinite period of time. If you leave the country on an expired tourist visa you may pay a fine and continue on your way. There are expats who have lived in Egypt for years, are well-entrenched in careers and have never applied for work permits.
If you work for an Egyptian company, your employer may not even want to provide you with a work permit. When a company applies to the government to acquire a work visa it must prove that only a foreigner – not an Egyptian – is capable of doing the job. In many cases companies simply do not want to bother. Instead, they make arrangements with their HR departments to pay foreigners in cashable checks.
The major issue with not obtaining the proper visa, ironically enough, has nothing to do with prison or deportation. If you want to travel to the Sinai Peninsula or Upper (Southern) Egypt, you will have to pass through innumerable security checkpoints. Because of the delicate security situation in some of these areas, you will not be permitted to travel to them if your passport and visa are not in order.
As a general rule it is safest to follow proper procedures as closely as possible and obtain the proper visa and permits. Be aware, however, that in some cases it may not be possible. This can sometimes depend entirely on the individual officials that you are dealing with in a given office. If you run into difficulties, always remain patient and courteous – know that you are not the first to have problems with the process, and you certainly won’t be the last!