Vietnam on the EU Tax Blacklist: A Guide for EU Buyers

12. Mai 2026

  • Vietnam
  • Unternehmen
  • Vertrieb
  • Steuer

Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

What the EU decision does (and does not) do

The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

The ideological paradox: a Socialist Republic on a tax-haven list

Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

Why Vietnam was added: the listing criteria and timeline

Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

Vietnam’s response and the path to delisting

Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

How different payment types are affected in practice

Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

How European banks may respond (and what that looks like in practice)

Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

Non-tax defensive measures and EU funding implications

Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

DAC6 reporting and public country-by-country reporting

Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

Country notes (alphabetical)

Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

 

Practical next steps for EU companies

  1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
  2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
  3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
  4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
  5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
  6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
  7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
  8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
  9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

  • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
  • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
  • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
  • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
  • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
  • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

Legal Forms of Joint Ventures

Investors should understand the different corporate structures available for joint ventures:

  • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
  • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
  • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

Foreign Investment Law

Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

  • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
  • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

Why is ISIC4 Relevant?

The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

  • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
  • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
  • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
  • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
  • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
  • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

Strategic Considerations

  • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
  • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

Practical Tips

  • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
  • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
  • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

Compliance with Local Regulations

  • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
  • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
  • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

Conclusion

Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

And yet a surprising number of deals struggle to deliver their expected value.

When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

What Lawyers See vs. What Everyone Else Feels

For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

For everyone else, it feels different.

Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

Silence Is Not Neutral

Between announcement and closing, caution often turns into radio silence.

There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

The problem? Silence rarely creates stability.

In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

One Deal, Many Interpretations

Cross-border transactions remove the safety net of shared assumptions.

What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

That is why a single global message often falls flat.

The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

Employees Decide Earlier Than You Think

For employees, M&A feels personal long before it feels strategic.

They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

External Attention Changes the Equation

Cross-border deals attract public and political scrutiny that domestic transactions often do not.

Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

Why This Matters for Deal Counsel

For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

“He out… or me out”

In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

30-Year Tax Holiday

Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

Operational Substance Requirements: RHQ Functions and Compliance

At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

Mandatory Activities (to be activated within the first year):

  • Preparation and implementation of the regional strategy;
  • Strategic coordination of the MNE’s operations in the region;
  • Selection of products and services offered in the region;
  • M&A support;
  • Financial performance review;
  • Budget planning for regional operations;
  • Coordination of business units across MENA;
  • Market research and competitor analysis;
  • Identification of new market opportunities;
  • Marketing strategy development;
  • Preparation of operational and financial reports.

Optional Activities (minimum of three to be activated): These include, among others:

  • Research, development and innovation;
  • Sales and marketing;
  • Human resources and training;
  • Financial management, foreign exchange and treasury services;
  • Legal consultancy, compliance, internal audit;
  • Logistics, IP management, production, and technical support.

The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

Additional Substantive Requirements

  • Minimum of 15 employees in the first year;
  • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
  • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
  • RHQ operations must be exclusively performed within the Kingdom.

Licensing Process and Timing

The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

True Regional Authority and Kingdom-Centric Operations

Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

Localization Requirements

To ensure genuine local presence, the RHQ regime mandates:

  • Saudi residency and work permits for all RHQ personnel;
  • No hybrid or remote models from abroad;
  • Local registration of intellectual property and commercial identifiers;
  • Internal reporting and supervision obligations anchored in Saudi Arabia.

Is RHQ Establishment Mandatory or Optional?

While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

Conclusion: High-Reward, High-Compliance Environment

The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

Incorporation by a natural person

The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

  • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
  • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
  • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
  • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
  • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
  • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

Incorporation by a legal entity

The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

  • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
  • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

Egypt’s Position as a M&A Hub

In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

Key Drivers of M&A Growth

Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

Mergers Vs. Acquisitions

Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

  • Gain a larger market share.
  • Reduce operational costs.
  • Expand into new regions.
  • Boost profitability for shareholders after the merger.

An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

  • Purchase 100% of the target company’s shares, assets, and liabilities
  • Acquire more than 50% of shares to gain controlling interest without full ownership

From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

Egypt As An M&A Destination

Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

Overview of M&A activity in Egypt

Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

Most Notable M&A Deals and Transactions

The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

Sector-Specific M&A Trends

The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

Foreign Involvement In M&A Transactions In Egypt

Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

Gulf Countries (Saudi Arabia, UAE, Qatar)

  • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
  • Active investments in real estate, construction, and renewable energy projects.
  • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

European Union and Western Countries (UK, France, Germany)

  • Trade agreements and EU partnerships provide preferential access to markets.
  • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

United States

The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

China and The Belt and Road Initiative

Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

Russia’s Role in Egypt’s Energy Sector

Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

Key Laws Governing M&A Transactions

Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

  • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
  • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
  • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
  • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
  • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
  • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

Regulatory Authorities and Their Roles

Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

  • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
  • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
  • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
  • the Egyptian Stock Exchange (EGX) manages listed securities
  • the Central Bank of Egypt (CBE) regulates certain transactions, and the
  • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
  • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
  • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

Recent Legal and Regulatory Reforms in Egypt

In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

Corporate Law Amendments

  • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
  • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

Investment Law Updates

  • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
  • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

Competition Law Amendments and Pre-Approval for M&A

  • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
  • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
  • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

Foreign Exchange Regulations for Currency Repatriation

  • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
  • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

New Tax Incentives for Industrial Investment Projects

  • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
  • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
  • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

Foreign Ownership of Desert Land for Investment Projects

  • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
  • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
  • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

Updates to Regulations on Unlisted Securities Trading 

Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

Increased FRA Approval Threshold:

  • Previously, transactions exceeding 20 million EGPrequired FRA approval.
  • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

Extended Bank Deposit Period for Securities Settlement:

  • The settlement period for bank deposits related to securities transactions is now extended to two months.
  • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

Key Ramifications of the GMT for Vietnam

The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

Vietnam’s Response: Investment Support Fund and Proactive Measures

In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

Eligible taxpayers can receive cash subsidies for five specific expense categories:

  1. Human resource training and development
  2. Research and development expenses
  3. Fixed asset investments
  4. High-tech manufacturing expenses
  5. Social infrastructure systems

To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

  1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
  2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
  3. Considering cash grants for long-term qualified investments in high-tech industries

Conclusion

The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

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    Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

    For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

    What the EU decision does (and does not) do

    The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

    At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

    In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

    The ideological paradox: a Socialist Republic on a tax-haven list

    Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

    Why Vietnam was added: the listing criteria and timeline

    Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

    The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

    Vietnam’s response and the path to delisting

    Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

    How different payment types are affected in practice

    Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

    The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

    Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

    If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

    Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

    Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

    Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

    Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

    Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

    Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

    How European banks may respond (and what that looks like in practice)

    Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

    For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

    A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

    Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

    A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

    This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

    A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

    A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

    Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

    EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

    Non-tax defensive measures and EU funding implications

    Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

    DAC6 reporting and public country-by-country reporting

    Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

    Country notes (alphabetical)

    Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

    France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

    Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

    Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

    For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

    Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

    Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

    Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

     

    Practical next steps for EU companies

    1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
    2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
    3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
    4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
    5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
    6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
    7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
    8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
    9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

    Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

    Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

    Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

    • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
    • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
    • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
    • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
    • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
    • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

    Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

    Legal Forms of Joint Ventures

    Investors should understand the different corporate structures available for joint ventures:

    • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
    • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
    • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

    Foreign Investment Law

    Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

    • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
    • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

    Why is ISIC4 Relevant?

    The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

    Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

    • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
    • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
    • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
    • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
    • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
    • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

    Strategic Considerations

    • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
    • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

    Practical Tips

    • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
    • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
    • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

    Compliance with Local Regulations

    • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
    • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
    • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

    Conclusion

    Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

    Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

    And yet a surprising number of deals struggle to deliver their expected value.

    When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

    Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

    What Lawyers See vs. What Everyone Else Feels

    For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

    For everyone else, it feels different.

    Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

    These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

    The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

    Silence Is Not Neutral

    Between announcement and closing, caution often turns into radio silence.

    There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

    The problem? Silence rarely creates stability.

    In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

    By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

    One Deal, Many Interpretations

    Cross-border transactions remove the safety net of shared assumptions.

    What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

    That is why a single global message often falls flat.

    The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

    When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

    When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

    Employees Decide Earlier Than You Think

    For employees, M&A feels personal long before it feels strategic.

    They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

    Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

    Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

    Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

    External Attention Changes the Equation

    Cross-border deals attract public and political scrutiny that domestic transactions often do not.

    Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

    Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

    Why This Matters for Deal Counsel

    For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

    Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

    Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

    The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

    A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

    Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

    For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

    “He out… or me out”

    In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

    Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

    At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

    The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

    What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

    Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

    While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

    In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

    Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

    New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

    Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

    Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

    30-Year Tax Holiday

    Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

    Operational Substance Requirements: RHQ Functions and Compliance

    At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

    Mandatory Activities (to be activated within the first year):

    • Preparation and implementation of the regional strategy;
    • Strategic coordination of the MNE’s operations in the region;
    • Selection of products and services offered in the region;
    • M&A support;
    • Financial performance review;
    • Budget planning for regional operations;
    • Coordination of business units across MENA;
    • Market research and competitor analysis;
    • Identification of new market opportunities;
    • Marketing strategy development;
    • Preparation of operational and financial reports.

    Optional Activities (minimum of three to be activated): These include, among others:

    • Research, development and innovation;
    • Sales and marketing;
    • Human resources and training;
    • Financial management, foreign exchange and treasury services;
    • Legal consultancy, compliance, internal audit;
    • Logistics, IP management, production, and technical support.

    The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

    Additional Substantive Requirements

    • Minimum of 15 employees in the first year;
    • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
    • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
    • RHQ operations must be exclusively performed within the Kingdom.

    Licensing Process and Timing

    The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

    True Regional Authority and Kingdom-Centric Operations

    Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

    Localization Requirements

    To ensure genuine local presence, the RHQ regime mandates:

    • Saudi residency and work permits for all RHQ personnel;
    • No hybrid or remote models from abroad;
    • Local registration of intellectual property and commercial identifiers;
    • Internal reporting and supervision obligations anchored in Saudi Arabia.

    Is RHQ Establishment Mandatory or Optional?

    While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

    As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

    This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

    Conclusion: High-Reward, High-Compliance Environment

    The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

    In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

    Incorporation by a natural person

    The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

    To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

    Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

    • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
    • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
    • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
    • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
    • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
    • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

    Incorporation by a legal entity

    The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

    This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

    If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

    Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

    • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
    • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

    Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

    Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

    Egypt’s Position as a M&A Hub

    In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

    Key Drivers of M&A Growth

    Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

    The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

    Mergers Vs. Acquisitions

    Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

    A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

    • Gain a larger market share.
    • Reduce operational costs.
    • Expand into new regions.
    • Boost profitability for shareholders after the merger.

    An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

    • Purchase 100% of the target company’s shares, assets, and liabilities
    • Acquire more than 50% of shares to gain controlling interest without full ownership

    From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

    In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

    Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

    Egypt As An M&A Destination

    Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

    Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

    The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

    Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

    Overview of M&A activity in Egypt

    Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

    M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

    After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

    The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

    The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

    Most Notable M&A Deals and Transactions

    The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

    Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

    In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

    Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

    On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

    Sector-Specific M&A Trends

    The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

    The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

    Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

    Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

    M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

    Foreign Involvement In M&A Transactions In Egypt

    Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

    Gulf Countries (Saudi Arabia, UAE, Qatar)

    • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
    • Active investments in real estate, construction, and renewable energy projects.
    • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

    European Union and Western Countries (UK, France, Germany)

    • Trade agreements and EU partnerships provide preferential access to markets.
    • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

    United States

    The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

    Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

    China and The Belt and Road Initiative

    Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

    Russia’s Role in Egypt’s Energy Sector

    Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

    Key Laws Governing M&A Transactions

    Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

    • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
    • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
    • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
    • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
    • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
    • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

    Regulatory Authorities and Their Roles

    Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

    • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
    • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
    • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
    • the Egyptian Stock Exchange (EGX) manages listed securities
    • the Central Bank of Egypt (CBE) regulates certain transactions, and the
    • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
    • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
    • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

    Recent Legal and Regulatory Reforms in Egypt

    In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

    Corporate Law Amendments

    • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
    • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

    Investment Law Updates

    • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
    • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

    Competition Law Amendments and Pre-Approval for M&A

    • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
    • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
    • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

    Foreign Exchange Regulations for Currency Repatriation

    • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
    • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

    New Tax Incentives for Industrial Investment Projects

    • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
    • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
    • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

    Foreign Ownership of Desert Land for Investment Projects

    • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
    • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
    • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

    Updates to Regulations on Unlisted Securities Trading 

    Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

    Increased FRA Approval Threshold:

    • Previously, transactions exceeding 20 million EGPrequired FRA approval.
    • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

    Extended Bank Deposit Period for Securities Settlement:

    • The settlement period for bank deposits related to securities transactions is now extended to two months.
    • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

    Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

    Key Ramifications of the GMT for Vietnam

    The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

    The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

    Vietnam’s Response: Investment Support Fund and Proactive Measures

    In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

    Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

    Eligible taxpayers can receive cash subsidies for five specific expense categories:

    1. Human resource training and development
    2. Research and development expenses
    3. Fixed asset investments
    4. High-tech manufacturing expenses
    5. Social infrastructure systems

    To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

    In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

    1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
    2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
    3. Considering cash grants for long-term qualified investments in high-tech industries

    Conclusion

    The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

    Christian Ule

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      Communication in Cross-Border M&A – Why the Deal Isn’t Just in the Documents

      5. Januar 2026

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      Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

      For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

      What the EU decision does (and does not) do

      The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

      At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

      In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

      The ideological paradox: a Socialist Republic on a tax-haven list

      Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

      Why Vietnam was added: the listing criteria and timeline

      Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

      The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

      Vietnam’s response and the path to delisting

      Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

      How different payment types are affected in practice

      Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

      The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

      Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

      If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

      Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

      Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

      Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

      Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

      Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

      Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

      How European banks may respond (and what that looks like in practice)

      Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

      For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

      A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

      Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

      A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

      This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

      A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

      A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

      Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

      EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

      Non-tax defensive measures and EU funding implications

      Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

      DAC6 reporting and public country-by-country reporting

      Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

      Country notes (alphabetical)

      Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

      France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

      Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

      Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

      For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

      Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

      Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

      Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

       

      Practical next steps for EU companies

      1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
      2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
      3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
      4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
      5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
      6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
      7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
      8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
      9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

      Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

      Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

      Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

      • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
      • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
      • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
      • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
      • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
      • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

      Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

      Legal Forms of Joint Ventures

      Investors should understand the different corporate structures available for joint ventures:

      • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
      • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
      • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

      Foreign Investment Law

      Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

      • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
      • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

      Why is ISIC4 Relevant?

      The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

      Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

      • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
      • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
      • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
      • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
      • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
      • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

      Strategic Considerations

      • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
      • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

      Practical Tips

      • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
      • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
      • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

      Compliance with Local Regulations

      • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
      • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
      • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

      Conclusion

      Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

      Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

      And yet a surprising number of deals struggle to deliver their expected value.

      When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

      Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

      What Lawyers See vs. What Everyone Else Feels

      For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

      For everyone else, it feels different.

      Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

      These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

      The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

      Silence Is Not Neutral

      Between announcement and closing, caution often turns into radio silence.

      There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

      The problem? Silence rarely creates stability.

      In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

      By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

      One Deal, Many Interpretations

      Cross-border transactions remove the safety net of shared assumptions.

      What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

      That is why a single global message often falls flat.

      The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

      When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

      When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

      Employees Decide Earlier Than You Think

      For employees, M&A feels personal long before it feels strategic.

      They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

      Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

      Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

      Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

      External Attention Changes the Equation

      Cross-border deals attract public and political scrutiny that domestic transactions often do not.

      Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

      Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

      Why This Matters for Deal Counsel

      For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

      Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

      Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

      The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

      A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

      Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

      For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

      “He out… or me out”

      In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

      Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

      At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

      The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

      What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

      Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

      While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

      In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

      Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

      New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

      Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

      Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

      30-Year Tax Holiday

      Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

      Operational Substance Requirements: RHQ Functions and Compliance

      At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

      Mandatory Activities (to be activated within the first year):

      • Preparation and implementation of the regional strategy;
      • Strategic coordination of the MNE’s operations in the region;
      • Selection of products and services offered in the region;
      • M&A support;
      • Financial performance review;
      • Budget planning for regional operations;
      • Coordination of business units across MENA;
      • Market research and competitor analysis;
      • Identification of new market opportunities;
      • Marketing strategy development;
      • Preparation of operational and financial reports.

      Optional Activities (minimum of three to be activated): These include, among others:

      • Research, development and innovation;
      • Sales and marketing;
      • Human resources and training;
      • Financial management, foreign exchange and treasury services;
      • Legal consultancy, compliance, internal audit;
      • Logistics, IP management, production, and technical support.

      The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

      Additional Substantive Requirements

      • Minimum of 15 employees in the first year;
      • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
      • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
      • RHQ operations must be exclusively performed within the Kingdom.

      Licensing Process and Timing

      The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

      True Regional Authority and Kingdom-Centric Operations

      Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

      Localization Requirements

      To ensure genuine local presence, the RHQ regime mandates:

      • Saudi residency and work permits for all RHQ personnel;
      • No hybrid or remote models from abroad;
      • Local registration of intellectual property and commercial identifiers;
      • Internal reporting and supervision obligations anchored in Saudi Arabia.

      Is RHQ Establishment Mandatory or Optional?

      While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

      As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

      This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

      Conclusion: High-Reward, High-Compliance Environment

      The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

      In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

      Incorporation by a natural person

      The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

      To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

      Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

      • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
      • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
      • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
      • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
      • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
      • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

      Incorporation by a legal entity

      The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

      This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

      If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

      Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

      • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
      • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

      Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

      Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

      Egypt’s Position as a M&A Hub

      In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

      Key Drivers of M&A Growth

      Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

      The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

      Mergers Vs. Acquisitions

      Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

      A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

      • Gain a larger market share.
      • Reduce operational costs.
      • Expand into new regions.
      • Boost profitability for shareholders after the merger.

      An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

      • Purchase 100% of the target company’s shares, assets, and liabilities
      • Acquire more than 50% of shares to gain controlling interest without full ownership

      From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

      In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

      Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

      Egypt As An M&A Destination

      Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

      Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

      The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

      Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

      Overview of M&A activity in Egypt

      Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

      M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

      After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

      The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

      The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

      Most Notable M&A Deals and Transactions

      The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

      Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

      In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

      Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

      On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

      Sector-Specific M&A Trends

      The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

      The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

      Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

      Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

      M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

      Foreign Involvement In M&A Transactions In Egypt

      Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

      Gulf Countries (Saudi Arabia, UAE, Qatar)

      • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
      • Active investments in real estate, construction, and renewable energy projects.
      • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

      European Union and Western Countries (UK, France, Germany)

      • Trade agreements and EU partnerships provide preferential access to markets.
      • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

      United States

      The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

      Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

      China and The Belt and Road Initiative

      Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

      Russia’s Role in Egypt’s Energy Sector

      Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

      Key Laws Governing M&A Transactions

      Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

      • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
      • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
      • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
      • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
      • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
      • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

      Regulatory Authorities and Their Roles

      Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

      • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
      • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
      • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
      • the Egyptian Stock Exchange (EGX) manages listed securities
      • the Central Bank of Egypt (CBE) regulates certain transactions, and the
      • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
      • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
      • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

      Recent Legal and Regulatory Reforms in Egypt

      In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

      Corporate Law Amendments

      • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
      • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

      Investment Law Updates

      • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
      • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

      Competition Law Amendments and Pre-Approval for M&A

      • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
      • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
      • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

      Foreign Exchange Regulations for Currency Repatriation

      • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
      • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

      New Tax Incentives for Industrial Investment Projects

      • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
      • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
      • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

      Foreign Ownership of Desert Land for Investment Projects

      • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
      • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
      • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

      Updates to Regulations on Unlisted Securities Trading 

      Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

      Increased FRA Approval Threshold:

      • Previously, transactions exceeding 20 million EGPrequired FRA approval.
      • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

      Extended Bank Deposit Period for Securities Settlement:

      • The settlement period for bank deposits related to securities transactions is now extended to two months.
      • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

      Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

      Key Ramifications of the GMT for Vietnam

      The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

      The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

      Vietnam’s Response: Investment Support Fund and Proactive Measures

      In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

      Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

      Eligible taxpayers can receive cash subsidies for five specific expense categories:

      1. Human resource training and development
      2. Research and development expenses
      3. Fixed asset investments
      4. High-tech manufacturing expenses
      5. Social infrastructure systems

      To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

      In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

      1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
      2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
      3. Considering cash grants for long-term qualified investments in high-tech industries

      Conclusion

      The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

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        Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

        For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

        What the EU decision does (and does not) do

        The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

        At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

        In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

        The ideological paradox: a Socialist Republic on a tax-haven list

        Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

        Why Vietnam was added: the listing criteria and timeline

        Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

        The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

        Vietnam’s response and the path to delisting

        Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

        How different payment types are affected in practice

        Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

        The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

        Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

        If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

        Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

        Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

        Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

        Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

        Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

        Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

        How European banks may respond (and what that looks like in practice)

        Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

        For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

        A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

        Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

        A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

        This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

        A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

        A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

        Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

        EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

        Non-tax defensive measures and EU funding implications

        Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

        DAC6 reporting and public country-by-country reporting

        Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

        Country notes (alphabetical)

        Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

        France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

        Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

        Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

        For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

        Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

        Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

        Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

         

        Practical next steps for EU companies

        1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
        2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
        3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
        4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
        5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
        6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
        7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
        8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
        9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

        Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

        Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

        Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

        • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
        • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
        • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
        • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
        • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
        • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

        Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

        Legal Forms of Joint Ventures

        Investors should understand the different corporate structures available for joint ventures:

        • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
        • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
        • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

        Foreign Investment Law

        Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

        • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
        • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

        Why is ISIC4 Relevant?

        The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

        Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

        • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
        • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
        • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
        • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
        • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
        • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

        Strategic Considerations

        • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
        • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

        Practical Tips

        • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
        • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
        • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

        Compliance with Local Regulations

        • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
        • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
        • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

        Conclusion

        Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

        Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

        And yet a surprising number of deals struggle to deliver their expected value.

        When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

        Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

        What Lawyers See vs. What Everyone Else Feels

        For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

        For everyone else, it feels different.

        Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

        These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

        The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

        Silence Is Not Neutral

        Between announcement and closing, caution often turns into radio silence.

        There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

        The problem? Silence rarely creates stability.

        In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

        By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

        One Deal, Many Interpretations

        Cross-border transactions remove the safety net of shared assumptions.

        What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

        That is why a single global message often falls flat.

        The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

        When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

        When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

        Employees Decide Earlier Than You Think

        For employees, M&A feels personal long before it feels strategic.

        They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

        Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

        Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

        Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

        External Attention Changes the Equation

        Cross-border deals attract public and political scrutiny that domestic transactions often do not.

        Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

        Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

        Why This Matters for Deal Counsel

        For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

        Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

        Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

        The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

        A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

        Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

        For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

        “He out… or me out”

        In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

        Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

        At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

        The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

        What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

        Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

        While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

        In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

        Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

        New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

        Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

        Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

        30-Year Tax Holiday

        Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

        Operational Substance Requirements: RHQ Functions and Compliance

        At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

        Mandatory Activities (to be activated within the first year):

        • Preparation and implementation of the regional strategy;
        • Strategic coordination of the MNE’s operations in the region;
        • Selection of products and services offered in the region;
        • M&A support;
        • Financial performance review;
        • Budget planning for regional operations;
        • Coordination of business units across MENA;
        • Market research and competitor analysis;
        • Identification of new market opportunities;
        • Marketing strategy development;
        • Preparation of operational and financial reports.

        Optional Activities (minimum of three to be activated): These include, among others:

        • Research, development and innovation;
        • Sales and marketing;
        • Human resources and training;
        • Financial management, foreign exchange and treasury services;
        • Legal consultancy, compliance, internal audit;
        • Logistics, IP management, production, and technical support.

        The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

        Additional Substantive Requirements

        • Minimum of 15 employees in the first year;
        • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
        • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
        • RHQ operations must be exclusively performed within the Kingdom.

        Licensing Process and Timing

        The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

        True Regional Authority and Kingdom-Centric Operations

        Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

        Localization Requirements

        To ensure genuine local presence, the RHQ regime mandates:

        • Saudi residency and work permits for all RHQ personnel;
        • No hybrid or remote models from abroad;
        • Local registration of intellectual property and commercial identifiers;
        • Internal reporting and supervision obligations anchored in Saudi Arabia.

        Is RHQ Establishment Mandatory or Optional?

        While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

        As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

        This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

        Conclusion: High-Reward, High-Compliance Environment

        The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

        In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

        Incorporation by a natural person

        The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

        To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

        Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

        • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
        • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
        • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
        • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
        • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
        • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

        Incorporation by a legal entity

        The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

        This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

        If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

        Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

        • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
        • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

        Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

        Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

        Egypt’s Position as a M&A Hub

        In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

        Key Drivers of M&A Growth

        Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

        The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

        Mergers Vs. Acquisitions

        Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

        A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

        • Gain a larger market share.
        • Reduce operational costs.
        • Expand into new regions.
        • Boost profitability for shareholders after the merger.

        An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

        • Purchase 100% of the target company’s shares, assets, and liabilities
        • Acquire more than 50% of shares to gain controlling interest without full ownership

        From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

        In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

        Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

        Egypt As An M&A Destination

        Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

        Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

        The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

        Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

        Overview of M&A activity in Egypt

        Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

        M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

        After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

        The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

        The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

        Most Notable M&A Deals and Transactions

        The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

        Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

        In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

        Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

        On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

        Sector-Specific M&A Trends

        The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

        The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

        Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

        Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

        M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

        Foreign Involvement In M&A Transactions In Egypt

        Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

        Gulf Countries (Saudi Arabia, UAE, Qatar)

        • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
        • Active investments in real estate, construction, and renewable energy projects.
        • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

        European Union and Western Countries (UK, France, Germany)

        • Trade agreements and EU partnerships provide preferential access to markets.
        • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

        United States

        The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

        Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

        China and The Belt and Road Initiative

        Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

        Russia’s Role in Egypt’s Energy Sector

        Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

        Key Laws Governing M&A Transactions

        Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

        • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
        • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
        • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
        • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
        • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
        • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

        Regulatory Authorities and Their Roles

        Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

        • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
        • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
        • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
        • the Egyptian Stock Exchange (EGX) manages listed securities
        • the Central Bank of Egypt (CBE) regulates certain transactions, and the
        • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
        • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
        • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

        Recent Legal and Regulatory Reforms in Egypt

        In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

        Corporate Law Amendments

        • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
        • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

        Investment Law Updates

        • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
        • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

        Competition Law Amendments and Pre-Approval for M&A

        • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
        • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
        • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

        Foreign Exchange Regulations for Currency Repatriation

        • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
        • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

        New Tax Incentives for Industrial Investment Projects

        • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
        • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
        • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

        Foreign Ownership of Desert Land for Investment Projects

        • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
        • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
        • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

        Updates to Regulations on Unlisted Securities Trading 

        Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

        Increased FRA Approval Threshold:

        • Previously, transactions exceeding 20 million EGPrequired FRA approval.
        • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

        Extended Bank Deposit Period for Securities Settlement:

        • The settlement period for bank deposits related to securities transactions is now extended to two months.
        • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

        Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

        Key Ramifications of the GMT for Vietnam

        The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

        The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

        Vietnam’s Response: Investment Support Fund and Proactive Measures

        In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

        Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

        Eligible taxpayers can receive cash subsidies for five specific expense categories:

        1. Human resource training and development
        2. Research and development expenses
        3. Fixed asset investments
        4. High-tech manufacturing expenses
        5. Social infrastructure systems

        To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

        In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

        1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
        2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
        3. Considering cash grants for long-term qualified investments in high-tech industries

        Conclusion

        The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

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          Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

          For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

          What the EU decision does (and does not) do

          The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

          At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

          In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

          The ideological paradox: a Socialist Republic on a tax-haven list

          Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

          Why Vietnam was added: the listing criteria and timeline

          Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

          The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

          Vietnam’s response and the path to delisting

          Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

          How different payment types are affected in practice

          Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

          The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

          Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

          If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

          Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

          Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

          Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

          Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

          Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

          Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

          How European banks may respond (and what that looks like in practice)

          Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

          For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

          A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

          Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

          A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

          This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

          A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

          A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

          Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

          EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

          Non-tax defensive measures and EU funding implications

          Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

          DAC6 reporting and public country-by-country reporting

          Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

          Country notes (alphabetical)

          Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

          France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

          Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

          Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

          For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

          Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

          Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

          Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

           

          Practical next steps for EU companies

          1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
          2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
          3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
          4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
          5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
          6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
          7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
          8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
          9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

          Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

          Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

          Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

          • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
          • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
          • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
          • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
          • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
          • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

          Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

          Legal Forms of Joint Ventures

          Investors should understand the different corporate structures available for joint ventures:

          • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
          • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
          • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

          Foreign Investment Law

          Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

          • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
          • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

          Why is ISIC4 Relevant?

          The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

          Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

          • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
          • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
          • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
          • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
          • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
          • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

          Strategic Considerations

          • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
          • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

          Practical Tips

          • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
          • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
          • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

          Compliance with Local Regulations

          • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
          • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
          • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

          Conclusion

          Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

          Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

          And yet a surprising number of deals struggle to deliver their expected value.

          When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

          Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

          What Lawyers See vs. What Everyone Else Feels

          For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

          For everyone else, it feels different.

          Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

          These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

          The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

          Silence Is Not Neutral

          Between announcement and closing, caution often turns into radio silence.

          There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

          The problem? Silence rarely creates stability.

          In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

          By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

          One Deal, Many Interpretations

          Cross-border transactions remove the safety net of shared assumptions.

          What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

          That is why a single global message often falls flat.

          The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

          When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

          When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

          Employees Decide Earlier Than You Think

          For employees, M&A feels personal long before it feels strategic.

          They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

          Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

          Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

          Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

          External Attention Changes the Equation

          Cross-border deals attract public and political scrutiny that domestic transactions often do not.

          Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

          Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

          Why This Matters for Deal Counsel

          For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

          Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

          Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

          The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

          A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

          Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

          For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

          “He out… or me out”

          In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

          Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

          At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

          The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

          What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

          Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

          While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

          In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

          Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

          New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

          Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

          Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

          30-Year Tax Holiday

          Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

          Operational Substance Requirements: RHQ Functions and Compliance

          At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

          Mandatory Activities (to be activated within the first year):

          • Preparation and implementation of the regional strategy;
          • Strategic coordination of the MNE’s operations in the region;
          • Selection of products and services offered in the region;
          • M&A support;
          • Financial performance review;
          • Budget planning for regional operations;
          • Coordination of business units across MENA;
          • Market research and competitor analysis;
          • Identification of new market opportunities;
          • Marketing strategy development;
          • Preparation of operational and financial reports.

          Optional Activities (minimum of three to be activated): These include, among others:

          • Research, development and innovation;
          • Sales and marketing;
          • Human resources and training;
          • Financial management, foreign exchange and treasury services;
          • Legal consultancy, compliance, internal audit;
          • Logistics, IP management, production, and technical support.

          The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

          Additional Substantive Requirements

          • Minimum of 15 employees in the first year;
          • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
          • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
          • RHQ operations must be exclusively performed within the Kingdom.

          Licensing Process and Timing

          The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

          True Regional Authority and Kingdom-Centric Operations

          Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

          Localization Requirements

          To ensure genuine local presence, the RHQ regime mandates:

          • Saudi residency and work permits for all RHQ personnel;
          • No hybrid or remote models from abroad;
          • Local registration of intellectual property and commercial identifiers;
          • Internal reporting and supervision obligations anchored in Saudi Arabia.

          Is RHQ Establishment Mandatory or Optional?

          While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

          As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

          This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

          Conclusion: High-Reward, High-Compliance Environment

          The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

          In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

          Incorporation by a natural person

          The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

          To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

          Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

          • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
          • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
          • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
          • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
          • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
          • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

          Incorporation by a legal entity

          The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

          This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

          If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

          Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

          • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
          • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

          Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

          Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

          Egypt’s Position as a M&A Hub

          In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

          Key Drivers of M&A Growth

          Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

          The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

          Mergers Vs. Acquisitions

          Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

          A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

          • Gain a larger market share.
          • Reduce operational costs.
          • Expand into new regions.
          • Boost profitability for shareholders after the merger.

          An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

          • Purchase 100% of the target company’s shares, assets, and liabilities
          • Acquire more than 50% of shares to gain controlling interest without full ownership

          From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

          In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

          Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

          Egypt As An M&A Destination

          Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

          Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

          The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

          Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

          Overview of M&A activity in Egypt

          Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

          M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

          After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

          The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

          The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

          Most Notable M&A Deals and Transactions

          The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

          Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

          In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

          Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

          On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

          Sector-Specific M&A Trends

          The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

          The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

          Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

          Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

          M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

          Foreign Involvement In M&A Transactions In Egypt

          Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

          Gulf Countries (Saudi Arabia, UAE, Qatar)

          • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
          • Active investments in real estate, construction, and renewable energy projects.
          • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

          European Union and Western Countries (UK, France, Germany)

          • Trade agreements and EU partnerships provide preferential access to markets.
          • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

          United States

          The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

          Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

          China and The Belt and Road Initiative

          Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

          Russia’s Role in Egypt’s Energy Sector

          Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

          Key Laws Governing M&A Transactions

          Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

          • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
          • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
          • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
          • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
          • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
          • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

          Regulatory Authorities and Their Roles

          Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

          • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
          • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
          • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
          • the Egyptian Stock Exchange (EGX) manages listed securities
          • the Central Bank of Egypt (CBE) regulates certain transactions, and the
          • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
          • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
          • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

          Recent Legal and Regulatory Reforms in Egypt

          In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

          Corporate Law Amendments

          • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
          • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

          Investment Law Updates

          • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
          • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

          Competition Law Amendments and Pre-Approval for M&A

          • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
          • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
          • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

          Foreign Exchange Regulations for Currency Repatriation

          • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
          • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

          New Tax Incentives for Industrial Investment Projects

          • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
          • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
          • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

          Foreign Ownership of Desert Land for Investment Projects

          • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
          • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
          • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

          Updates to Regulations on Unlisted Securities Trading 

          Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

          Increased FRA Approval Threshold:

          • Previously, transactions exceeding 20 million EGPrequired FRA approval.
          • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

          Extended Bank Deposit Period for Securities Settlement:

          • The settlement period for bank deposits related to securities transactions is now extended to two months.
          • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

          Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

          Key Ramifications of the GMT for Vietnam

          The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

          The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

          Vietnam’s Response: Investment Support Fund and Proactive Measures

          In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

          Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

          Eligible taxpayers can receive cash subsidies for five specific expense categories:

          1. Human resource training and development
          2. Research and development expenses
          3. Fixed asset investments
          4. High-tech manufacturing expenses
          5. Social infrastructure systems

          To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

          In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

          1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
          2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
          3. Considering cash grants for long-term qualified investments in high-tech industries

          Conclusion

          The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

          Christian Ule

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            How to incorporate a company in Spain

            24. Juni 2025

            • Spanien
            • Unternehmen

            Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

            For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

            What the EU decision does (and does not) do

            The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

            At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

            In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

            The ideological paradox: a Socialist Republic on a tax-haven list

            Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

            Why Vietnam was added: the listing criteria and timeline

            Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

            The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

            Vietnam’s response and the path to delisting

            Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

            How different payment types are affected in practice

            Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

            The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

            Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

            If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

            Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

            Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

            Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

            Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

            Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

            Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

            How European banks may respond (and what that looks like in practice)

            Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

            For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

            A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

            Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

            A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

            This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

            A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

            A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

            Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

            EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

            Non-tax defensive measures and EU funding implications

            Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

            DAC6 reporting and public country-by-country reporting

            Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

            Country notes (alphabetical)

            Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

            France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

            Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

            Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

            For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

            Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

            Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

            Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

             

            Practical next steps for EU companies

            1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
            2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
            3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
            4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
            5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
            6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
            7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
            8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
            9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

            Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

            Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

            Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

            • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
            • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
            • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
            • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
            • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
            • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

            Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

            Legal Forms of Joint Ventures

            Investors should understand the different corporate structures available for joint ventures:

            • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
            • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
            • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

            Foreign Investment Law

            Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

            • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
            • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

            Why is ISIC4 Relevant?

            The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

            Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

            • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
            • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
            • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
            • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
            • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
            • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

            Strategic Considerations

            • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
            • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

            Practical Tips

            • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
            • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
            • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

            Compliance with Local Regulations

            • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
            • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
            • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

            Conclusion

            Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

            Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

            And yet a surprising number of deals struggle to deliver their expected value.

            When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

            Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

            What Lawyers See vs. What Everyone Else Feels

            For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

            For everyone else, it feels different.

            Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

            These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

            The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

            Silence Is Not Neutral

            Between announcement and closing, caution often turns into radio silence.

            There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

            The problem? Silence rarely creates stability.

            In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

            By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

            One Deal, Many Interpretations

            Cross-border transactions remove the safety net of shared assumptions.

            What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

            That is why a single global message often falls flat.

            The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

            When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

            When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

            Employees Decide Earlier Than You Think

            For employees, M&A feels personal long before it feels strategic.

            They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

            Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

            Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

            Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

            External Attention Changes the Equation

            Cross-border deals attract public and political scrutiny that domestic transactions often do not.

            Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

            Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

            Why This Matters for Deal Counsel

            For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

            Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

            Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

            The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

            A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

            Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

            For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

            “He out… or me out”

            In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

            Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

            At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

            The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

            What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

            Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

            While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

            In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

            Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

            New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

            Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

            Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

            30-Year Tax Holiday

            Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

            Operational Substance Requirements: RHQ Functions and Compliance

            At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

            Mandatory Activities (to be activated within the first year):

            • Preparation and implementation of the regional strategy;
            • Strategic coordination of the MNE’s operations in the region;
            • Selection of products and services offered in the region;
            • M&A support;
            • Financial performance review;
            • Budget planning for regional operations;
            • Coordination of business units across MENA;
            • Market research and competitor analysis;
            • Identification of new market opportunities;
            • Marketing strategy development;
            • Preparation of operational and financial reports.

            Optional Activities (minimum of three to be activated): These include, among others:

            • Research, development and innovation;
            • Sales and marketing;
            • Human resources and training;
            • Financial management, foreign exchange and treasury services;
            • Legal consultancy, compliance, internal audit;
            • Logistics, IP management, production, and technical support.

            The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

            Additional Substantive Requirements

            • Minimum of 15 employees in the first year;
            • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
            • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
            • RHQ operations must be exclusively performed within the Kingdom.

            Licensing Process and Timing

            The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

            True Regional Authority and Kingdom-Centric Operations

            Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

            Localization Requirements

            To ensure genuine local presence, the RHQ regime mandates:

            • Saudi residency and work permits for all RHQ personnel;
            • No hybrid or remote models from abroad;
            • Local registration of intellectual property and commercial identifiers;
            • Internal reporting and supervision obligations anchored in Saudi Arabia.

            Is RHQ Establishment Mandatory or Optional?

            While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

            As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

            This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

            Conclusion: High-Reward, High-Compliance Environment

            The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

            In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

            Incorporation by a natural person

            The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

            To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

            Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

            • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
            • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
            • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
            • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
            • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
            • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

            Incorporation by a legal entity

            The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

            This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

            If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

            Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

            • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
            • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

            Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

            Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

            Egypt’s Position as a M&A Hub

            In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

            Key Drivers of M&A Growth

            Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

            The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

            Mergers Vs. Acquisitions

            Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

            A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

            • Gain a larger market share.
            • Reduce operational costs.
            • Expand into new regions.
            • Boost profitability for shareholders after the merger.

            An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

            • Purchase 100% of the target company’s shares, assets, and liabilities
            • Acquire more than 50% of shares to gain controlling interest without full ownership

            From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

            In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

            Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

            Egypt As An M&A Destination

            Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

            Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

            The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

            Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

            Overview of M&A activity in Egypt

            Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

            M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

            After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

            The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

            The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

            Most Notable M&A Deals and Transactions

            The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

            Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

            In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

            Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

            On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

            Sector-Specific M&A Trends

            The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

            The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

            Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

            Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

            M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

            Foreign Involvement In M&A Transactions In Egypt

            Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

            Gulf Countries (Saudi Arabia, UAE, Qatar)

            • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
            • Active investments in real estate, construction, and renewable energy projects.
            • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

            European Union and Western Countries (UK, France, Germany)

            • Trade agreements and EU partnerships provide preferential access to markets.
            • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

            United States

            The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

            Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

            China and The Belt and Road Initiative

            Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

            Russia’s Role in Egypt’s Energy Sector

            Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

            Key Laws Governing M&A Transactions

            Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

            • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
            • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
            • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
            • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
            • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
            • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

            Regulatory Authorities and Their Roles

            Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

            • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
            • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
            • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
            • the Egyptian Stock Exchange (EGX) manages listed securities
            • the Central Bank of Egypt (CBE) regulates certain transactions, and the
            • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
            • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
            • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

            Recent Legal and Regulatory Reforms in Egypt

            In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

            Corporate Law Amendments

            • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
            • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

            Investment Law Updates

            • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
            • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

            Competition Law Amendments and Pre-Approval for M&A

            • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
            • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
            • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

            Foreign Exchange Regulations for Currency Repatriation

            • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
            • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

            New Tax Incentives for Industrial Investment Projects

            • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
            • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
            • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

            Foreign Ownership of Desert Land for Investment Projects

            • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
            • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
            • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

            Updates to Regulations on Unlisted Securities Trading 

            Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

            Increased FRA Approval Threshold:

            • Previously, transactions exceeding 20 million EGPrequired FRA approval.
            • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

            Extended Bank Deposit Period for Securities Settlement:

            • The settlement period for bank deposits related to securities transactions is now extended to two months.
            • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

            Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

            Key Ramifications of the GMT for Vietnam

            The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

            The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

            Vietnam’s Response: Investment Support Fund and Proactive Measures

            In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

            Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

            Eligible taxpayers can receive cash subsidies for five specific expense categories:

            1. Human resource training and development
            2. Research and development expenses
            3. Fixed asset investments
            4. High-tech manufacturing expenses
            5. Social infrastructure systems

            To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

            In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

            1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
            2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
            3. Considering cash grants for long-term qualified investments in high-tech industries

            Conclusion

            The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

            Javier Gaspar Álvarez-Novoa

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              Mergers and Acquisitions in Egypt | Legal, Financial & Regulatory Insights

              14. Mai 2025

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              Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

              For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

              What the EU decision does (and does not) do

              The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

              At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

              In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

              The ideological paradox: a Socialist Republic on a tax-haven list

              Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

              Why Vietnam was added: the listing criteria and timeline

              Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

              The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

              Vietnam’s response and the path to delisting

              Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

              How different payment types are affected in practice

              Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

              The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

              Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

              If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

              Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

              Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

              Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

              Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

              Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

              Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

              How European banks may respond (and what that looks like in practice)

              Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

              For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

              A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

              Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

              A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

              This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

              A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

              A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

              Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

              EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

              Non-tax defensive measures and EU funding implications

              Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

              DAC6 reporting and public country-by-country reporting

              Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

              Country notes (alphabetical)

              Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

              France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

              Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

              Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

              For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

              Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

              Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

              Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

               

              Practical next steps for EU companies

              1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
              2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
              3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
              4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
              5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
              6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
              7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
              8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
              9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

              Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

              Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

              Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

              • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
              • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
              • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
              • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
              • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
              • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

              Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

              Legal Forms of Joint Ventures

              Investors should understand the different corporate structures available for joint ventures:

              • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
              • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
              • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

              Foreign Investment Law

              Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

              • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
              • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

              Why is ISIC4 Relevant?

              The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

              Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

              • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
              • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
              • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
              • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
              • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
              • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

              Strategic Considerations

              • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
              • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

              Practical Tips

              • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
              • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
              • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

              Compliance with Local Regulations

              • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
              • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
              • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

              Conclusion

              Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

              Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

              And yet a surprising number of deals struggle to deliver their expected value.

              When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

              Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

              What Lawyers See vs. What Everyone Else Feels

              For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

              For everyone else, it feels different.

              Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

              These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

              The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

              Silence Is Not Neutral

              Between announcement and closing, caution often turns into radio silence.

              There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

              The problem? Silence rarely creates stability.

              In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

              By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

              One Deal, Many Interpretations

              Cross-border transactions remove the safety net of shared assumptions.

              What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

              That is why a single global message often falls flat.

              The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

              When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

              When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

              Employees Decide Earlier Than You Think

              For employees, M&A feels personal long before it feels strategic.

              They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

              Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

              Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

              Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

              External Attention Changes the Equation

              Cross-border deals attract public and political scrutiny that domestic transactions often do not.

              Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

              Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

              Why This Matters for Deal Counsel

              For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

              Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

              Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

              The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

              A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

              Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

              For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

              “He out… or me out”

              In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

              Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

              At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

              The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

              What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

              Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

              While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

              In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

              Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

              New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

              Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

              Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

              30-Year Tax Holiday

              Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

              Operational Substance Requirements: RHQ Functions and Compliance

              At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

              Mandatory Activities (to be activated within the first year):

              • Preparation and implementation of the regional strategy;
              • Strategic coordination of the MNE’s operations in the region;
              • Selection of products and services offered in the region;
              • M&A support;
              • Financial performance review;
              • Budget planning for regional operations;
              • Coordination of business units across MENA;
              • Market research and competitor analysis;
              • Identification of new market opportunities;
              • Marketing strategy development;
              • Preparation of operational and financial reports.

              Optional Activities (minimum of three to be activated): These include, among others:

              • Research, development and innovation;
              • Sales and marketing;
              • Human resources and training;
              • Financial management, foreign exchange and treasury services;
              • Legal consultancy, compliance, internal audit;
              • Logistics, IP management, production, and technical support.

              The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

              Additional Substantive Requirements

              • Minimum of 15 employees in the first year;
              • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
              • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
              • RHQ operations must be exclusively performed within the Kingdom.

              Licensing Process and Timing

              The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

              True Regional Authority and Kingdom-Centric Operations

              Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

              Localization Requirements

              To ensure genuine local presence, the RHQ regime mandates:

              • Saudi residency and work permits for all RHQ personnel;
              • No hybrid or remote models from abroad;
              • Local registration of intellectual property and commercial identifiers;
              • Internal reporting and supervision obligations anchored in Saudi Arabia.

              Is RHQ Establishment Mandatory or Optional?

              While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

              As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

              This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

              Conclusion: High-Reward, High-Compliance Environment

              The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

              In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

              Incorporation by a natural person

              The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

              To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

              Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

              • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
              • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
              • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
              • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
              • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
              • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

              Incorporation by a legal entity

              The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

              This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

              If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

              Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

              • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
              • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

              Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

              Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

              Egypt’s Position as a M&A Hub

              In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

              Key Drivers of M&A Growth

              Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

              The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

              Mergers Vs. Acquisitions

              Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

              A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

              • Gain a larger market share.
              • Reduce operational costs.
              • Expand into new regions.
              • Boost profitability for shareholders after the merger.

              An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

              • Purchase 100% of the target company’s shares, assets, and liabilities
              • Acquire more than 50% of shares to gain controlling interest without full ownership

              From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

              In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

              Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

              Egypt As An M&A Destination

              Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

              Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

              The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

              Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

              Overview of M&A activity in Egypt

              Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

              M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

              After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

              The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

              The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

              Most Notable M&A Deals and Transactions

              The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

              Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

              In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

              Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

              On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

              Sector-Specific M&A Trends

              The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

              The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

              Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

              Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

              M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

              Foreign Involvement In M&A Transactions In Egypt

              Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

              Gulf Countries (Saudi Arabia, UAE, Qatar)

              • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
              • Active investments in real estate, construction, and renewable energy projects.
              • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

              European Union and Western Countries (UK, France, Germany)

              • Trade agreements and EU partnerships provide preferential access to markets.
              • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

              United States

              The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

              Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

              China and The Belt and Road Initiative

              Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

              Russia’s Role in Egypt’s Energy Sector

              Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

              Key Laws Governing M&A Transactions

              Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

              • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
              • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
              • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
              • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
              • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
              • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

              Regulatory Authorities and Their Roles

              Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

              • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
              • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
              • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
              • the Egyptian Stock Exchange (EGX) manages listed securities
              • the Central Bank of Egypt (CBE) regulates certain transactions, and the
              • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
              • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
              • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

              Recent Legal and Regulatory Reforms in Egypt

              In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

              Corporate Law Amendments

              • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
              • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

              Investment Law Updates

              • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
              • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

              Competition Law Amendments and Pre-Approval for M&A

              • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
              • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
              • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

              Foreign Exchange Regulations for Currency Repatriation

              • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
              • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

              New Tax Incentives for Industrial Investment Projects

              • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
              • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
              • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

              Foreign Ownership of Desert Land for Investment Projects

              • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
              • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
              • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

              Updates to Regulations on Unlisted Securities Trading 

              Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

              Increased FRA Approval Threshold:

              • Previously, transactions exceeding 20 million EGPrequired FRA approval.
              • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

              Extended Bank Deposit Period for Securities Settlement:

              • The settlement period for bank deposits related to securities transactions is now extended to two months.
              • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

              Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

              Key Ramifications of the GMT for Vietnam

              The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

              The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

              Vietnam’s Response: Investment Support Fund and Proactive Measures

              In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

              Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

              Eligible taxpayers can receive cash subsidies for five specific expense categories:

              1. Human resource training and development
              2. Research and development expenses
              3. Fixed asset investments
              4. High-tech manufacturing expenses
              5. Social infrastructure systems

              To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

              In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

              1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
              2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
              3. Considering cash grants for long-term qualified investments in high-tech industries

              Conclusion

              The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

              Christian Ule

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                Vietnam Tackles Global Minimum Tax Implications

                2. Februar 2024

                • Vietnam
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                Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

                For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

                What the EU decision does (and does not) do

                The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

                At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

                In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

                The ideological paradox: a Socialist Republic on a tax-haven list

                Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

                Why Vietnam was added: the listing criteria and timeline

                Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

                The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

                Vietnam’s response and the path to delisting

                Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

                How different payment types are affected in practice

                Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

                The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

                Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

                If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

                Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

                Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

                Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

                Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

                Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

                Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

                How European banks may respond (and what that looks like in practice)

                Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

                For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

                A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

                Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

                A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

                This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

                A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

                A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

                Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

                EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

                Non-tax defensive measures and EU funding implications

                Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

                DAC6 reporting and public country-by-country reporting

                Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

                Country notes (alphabetical)

                Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

                France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

                Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

                Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

                For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

                Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

                Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

                Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

                 

                Practical next steps for EU companies

                1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
                2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
                3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
                4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
                5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
                6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
                7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
                8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
                9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

                Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

                Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

                Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

                • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
                • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
                • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
                • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
                • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
                • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

                Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

                Legal Forms of Joint Ventures

                Investors should understand the different corporate structures available for joint ventures:

                • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
                • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
                • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

                Foreign Investment Law

                Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

                • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
                • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

                Why is ISIC4 Relevant?

                The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

                Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

                • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
                • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
                • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
                • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
                • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
                • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

                Strategic Considerations

                • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
                • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

                Practical Tips

                • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
                • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
                • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

                Compliance with Local Regulations

                • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
                • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
                • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

                Conclusion

                Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

                Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

                And yet a surprising number of deals struggle to deliver their expected value.

                When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

                Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

                What Lawyers See vs. What Everyone Else Feels

                For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

                For everyone else, it feels different.

                Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

                These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

                The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

                Silence Is Not Neutral

                Between announcement and closing, caution often turns into radio silence.

                There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

                The problem? Silence rarely creates stability.

                In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

                By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

                One Deal, Many Interpretations

                Cross-border transactions remove the safety net of shared assumptions.

                What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

                That is why a single global message often falls flat.

                The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

                When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

                When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

                Employees Decide Earlier Than You Think

                For employees, M&A feels personal long before it feels strategic.

                They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

                Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

                Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

                Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

                External Attention Changes the Equation

                Cross-border deals attract public and political scrutiny that domestic transactions often do not.

                Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

                Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

                Why This Matters for Deal Counsel

                For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

                Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

                Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

                The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

                A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

                Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

                For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

                “He out… or me out”

                In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

                Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

                At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

                The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

                What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

                Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

                While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

                In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

                Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

                New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

                Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

                Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

                30-Year Tax Holiday

                Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

                Operational Substance Requirements: RHQ Functions and Compliance

                At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

                Mandatory Activities (to be activated within the first year):

                • Preparation and implementation of the regional strategy;
                • Strategic coordination of the MNE’s operations in the region;
                • Selection of products and services offered in the region;
                • M&A support;
                • Financial performance review;
                • Budget planning for regional operations;
                • Coordination of business units across MENA;
                • Market research and competitor analysis;
                • Identification of new market opportunities;
                • Marketing strategy development;
                • Preparation of operational and financial reports.

                Optional Activities (minimum of three to be activated): These include, among others:

                • Research, development and innovation;
                • Sales and marketing;
                • Human resources and training;
                • Financial management, foreign exchange and treasury services;
                • Legal consultancy, compliance, internal audit;
                • Logistics, IP management, production, and technical support.

                The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

                Additional Substantive Requirements

                • Minimum of 15 employees in the first year;
                • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
                • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
                • RHQ operations must be exclusively performed within the Kingdom.

                Licensing Process and Timing

                The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

                True Regional Authority and Kingdom-Centric Operations

                Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

                Localization Requirements

                To ensure genuine local presence, the RHQ regime mandates:

                • Saudi residency and work permits for all RHQ personnel;
                • No hybrid or remote models from abroad;
                • Local registration of intellectual property and commercial identifiers;
                • Internal reporting and supervision obligations anchored in Saudi Arabia.

                Is RHQ Establishment Mandatory or Optional?

                While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

                As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

                This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

                Conclusion: High-Reward, High-Compliance Environment

                The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

                In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

                Incorporation by a natural person

                The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

                To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

                Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

                • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
                • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
                • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
                • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
                • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
                • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

                Incorporation by a legal entity

                The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

                This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

                If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

                Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

                • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
                • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

                Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

                Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

                Egypt’s Position as a M&A Hub

                In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

                Key Drivers of M&A Growth

                Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

                The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

                Mergers Vs. Acquisitions

                Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

                A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

                • Gain a larger market share.
                • Reduce operational costs.
                • Expand into new regions.
                • Boost profitability for shareholders after the merger.

                An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

                • Purchase 100% of the target company’s shares, assets, and liabilities
                • Acquire more than 50% of shares to gain controlling interest without full ownership

                From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

                In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

                Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

                Egypt As An M&A Destination

                Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

                Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

                The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

                Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

                Overview of M&A activity in Egypt

                Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

                M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

                After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

                The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

                The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

                Most Notable M&A Deals and Transactions

                The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

                Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

                In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

                Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

                On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

                Sector-Specific M&A Trends

                The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

                The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

                Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

                Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

                M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

                Foreign Involvement In M&A Transactions In Egypt

                Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

                Gulf Countries (Saudi Arabia, UAE, Qatar)

                • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
                • Active investments in real estate, construction, and renewable energy projects.
                • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

                European Union and Western Countries (UK, France, Germany)

                • Trade agreements and EU partnerships provide preferential access to markets.
                • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

                United States

                The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

                Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

                China and The Belt and Road Initiative

                Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

                Russia’s Role in Egypt’s Energy Sector

                Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

                Key Laws Governing M&A Transactions

                Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

                • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
                • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
                • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
                • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
                • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
                • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

                Regulatory Authorities and Their Roles

                Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

                • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
                • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
                • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
                • the Egyptian Stock Exchange (EGX) manages listed securities
                • the Central Bank of Egypt (CBE) regulates certain transactions, and the
                • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
                • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
                • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

                Recent Legal and Regulatory Reforms in Egypt

                In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

                Corporate Law Amendments

                • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
                • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

                Investment Law Updates

                • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
                • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

                Competition Law Amendments and Pre-Approval for M&A

                • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
                • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
                • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

                Foreign Exchange Regulations for Currency Repatriation

                • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
                • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

                New Tax Incentives for Industrial Investment Projects

                • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
                • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
                • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

                Foreign Ownership of Desert Land for Investment Projects

                • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
                • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
                • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

                Updates to Regulations on Unlisted Securities Trading 

                Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

                Increased FRA Approval Threshold:

                • Previously, transactions exceeding 20 million EGPrequired FRA approval.
                • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

                Extended Bank Deposit Period for Securities Settlement:

                • The settlement period for bank deposits related to securities transactions is now extended to two months.
                • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

                Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

                Key Ramifications of the GMT for Vietnam

                The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

                The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

                Vietnam’s Response: Investment Support Fund and Proactive Measures

                In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

                Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

                Eligible taxpayers can receive cash subsidies for five specific expense categories:

                1. Human resource training and development
                2. Research and development expenses
                3. Fixed asset investments
                4. High-tech manufacturing expenses
                5. Social infrastructure systems

                To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

                In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

                1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
                2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
                3. Considering cash grants for long-term qualified investments in high-tech industries

                Conclusion

                The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

                Federico Vasoli

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                  China – Changes to Company Law

                  30. Januar 2024

                  • China
                  • Unternehmen

                  Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.

                  For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.

                  What the EU decision does (and does not) do

                  The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.

                  At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.

                  In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.

                  The ideological paradox: a Socialist Republic on a tax-haven list

                  Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one. 

                  Why Vietnam was added: the listing criteria and timeline

                  Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.

                  The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.

                  Vietnam’s response and the path to delisting

                  Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.

                  How different payment types are affected in practice

                  Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.

                  The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.

                  Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.

                  If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.

                  Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.

                  Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.

                  Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.

                  Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.

                  Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.

                  Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.

                  How European banks may respond (and what that looks like in practice)

                  Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.

                  For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.

                  A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.

                  Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.

                  A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.

                  This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.

                  A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.

                  A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.

                  Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.

                  EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.

                  Non-tax defensive measures and EU funding implications

                  Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.

                  DAC6 reporting and public country-by-country reporting

                  Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.

                  Country notes (alphabetical)

                  Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.

                  France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.

                  Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.

                  Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.

                  For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.

                  Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.

                  Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.

                  Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.

                   

                  Practical next steps for EU companies

                  1. Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
                  2. Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
                  3. DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
                  4. Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
                  5. Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
                  6. Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
                  7. Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
                  8. Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
                  9. Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.

                  Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.

                  Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.

                  Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:

                  • Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
                  • Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
                  • Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
                  • Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
                  • Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
                  • Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.

                  Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.

                  Legal Forms of Joint Ventures

                  Investors should understand the different corporate structures available for joint ventures:

                  • Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
                  • Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
                  • Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.

                  Foreign Investment Law

                  Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:

                  • Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
                  • Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.

                  Why is ISIC4 Relevant?

                  The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.

                  Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:

                  • Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
                  • Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
                  • Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
                  • Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
                  • Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
                  • Service Categories: Activities classified under service categories generally require significantly lower capital requirements.

                  Strategic Considerations

                  • Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
                  • Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.

                  Practical Tips

                  • Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
                  • A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
                  • Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.

                  Compliance with Local Regulations

                  • Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
                  • Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
                  • Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.

                  Conclusion

                  Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.

                  Cross-border merger and acquisition (M&A) transactions are carefully structured. Lawyers negotiate risk allocation, manage regulatory exposure, and draft documents designed to withstand scrutiny across multiple jurisdictions. On paper, many of these transactions are sound.

                  And yet a surprising number of deals struggle to deliver their expected value.

                  When that happens, the problem isn’t in the paperwork. It’s in the people: Do they believe in the deal?

                  Belief starts with communication. If people don’t understand the deal, the documents won’t save it.

                  What Lawyers See vs. What Everyone Else Feels

                  For lawyers, a transaction is all about managing risk. Disclosure is deliberate. Regulatory exposure is controlled. Words matter, and for good reason.

                  For everyone else, it feels different.

                  Employees hear their company has been sold to a foreign buyer and start filling in the blanks. Customers wonder if priorities will change. Regulators look for patterns. Journalists hunt for a local angle.

                  These audiences are not reading the transaction documents. They are responding to fragments of information, hallway chatter, and media coverage.

                  The gap between legal precision and human interpretation is where many cross-border deals begin to drift.

                  Silence Is Not Neutral

                  Between announcement and closing, caution often turns into radio silence.

                  There are understandable reasons for this. Multiple disclosure regimes apply. Competition laws constrain what can be shared. Employment rules vary by jurisdiction. No one wants to say the wrong thing in the wrong place.

                  The problem? Silence rarely creates stability.

                  In the absence of credible information, people make up their own stories. These spread quickly inside the company and beyond. Once those narratives take hold, they’re hard to unwind, even when the official version finally comes out.

                  By the time integration teams are ready to engage, behaviour has already shifted. Trust has thinned. Momentum has slowed. Positions have hardened, and assumptions feel like facts.

                  One Deal, Many Interpretations

                  Cross-border transactions remove the safety net of shared assumptions.

                  What sounds confident in one country can come across as arrogant in another. An announcement that seems careful and responsible in one market may look evasive somewhere else. Expectations around consultation, transparency and leadership vary more than many deal teams expect.

                  That is why a single global message often falls flat.

                  The commercial logic needs to be consistent, but trust is built locally. That means understanding who people listen to in each market and what they are actually worried about.

                  When uncertainty sets in, people protect their turf. Roles get guarded. Silos harden. Decisions slow as teams focus on keeping influence instead of building something new.

                  When communication misses this, the impact is rarely dramatic at first. It shows up slowly, through disengagement, resistance and delay.

                  Employees Decide Earlier Than You Think

                  For employees, M&A feels personal long before it feels strategic.

                  They want to know how decisions will be made, whether local expertise still matters, and what the deal means for their job and future. They don’t expect certainty, but they do expect straight answers.

                  Vague reassurances can create more anxiety than simply acknowledging what is not yet known.

                  Managers sit at the centre of this dynamic. They are more trusted than corporate communications but often lack the tools to explain what the deal means in practice. When they lack clarity, uncertainty spreads quickly and becomes entrenched.

                  Change is rarely the problem. Employees’ fear of losing their role, influence, identity, or stability drives disengagement.

                  External Attention Changes the Equation

                  Cross-border deals attract public and political scrutiny that domestic transactions often do not.

                  Foreign ownership, jobs, and national interest are not abstract concerns. They shape how regulators act and how quickly questions escalate. Media expectations differ widely. In some places, restraint signals seriousness. In others, it looks suspicious.

                  Internal uncertainty has a way of becoming visible externally. Customers and partners often sense it before leadership does.

                  Why This Matters for Deal Counsel

                  For lawyers advising on cross-border M&A, communication is not a branding exercise. It is part of deal execution.

                  Poorly sequenced communication can complicate regulatory engagement. Inconsistent messaging can undermine management credibility. Prolonged silence can make integration harder than it needs to be.

                  Handled well, communication supports the legal strategy rather than undercutting it. It helps ensure that what can be said, and what cannot, aligns with how people actually receive and interpret information in different markets. It reduces friction instead of creating it.

                  The most effective deal teams treat communication as core infrastructure. They build it in early, tailor it to each market, and know that trust comes from what’s said, what’s acknowledged, and who delivers the message.

                  A simple test applies: If the people affected by the deal can’t explain, in their own words, why it makes sense, the communication hasn’t worked.

                  Cross-border M&A rarely fails because advisers lack skill. It fails because the human side gets addressed too late.

                  For lawyers navigating these deals, spotting communication risk early can mean the difference between a deal that just closes, and one that truly succeeds.

                  “He out… or me out”

                  In the Netherlands, the legal landscape for resolving shareholder disputes has recently undergone a significant transformation. As of January 1, 2025, a new scheme—the so-called “geschillenregeling”—offers companies and shareholders a more practical and efficient way to address internal conflicts.

                  Shareholder conflicts are not unique to the Netherlands; they arise in companies everywhere, often because of unclear agreements, differing expectations, or personal tensions. Previously, Dutch law provided only lengthy and complex procedures, which sometimes made it impossible to reach a timely and effective solution. The new scheme changes this by introducing clear legal pathways for both majority and minority shareholders to break deadlocks and protect their interests.

                  At the heart of the new regulation is the theme “He out… or me out.” This phrase captures the essence of the two main legal actions now available. The first is the forced exit, where shareholders representing at least one-third of the company’s capital can ask the court – the Enterprise Chamber, known locally as the Ondernemingskamer – to force the departure of a shareholder whose conduct seriously harms the company. This conduct can include actions outside the formal role of shareholder, such as engaging in competing business activities.

                  The second route is the forced buyout, which allows a shareholder who has been seriously harmed by the actions of the other shareholders or by the company itself, to request to be bought out. In such cases, the court may order the remaining shareholders or the company to acquire the shares at a fair price.

                  What sets the Dutch approach apart is the speed and flexibility of the new procedure. Disputes are handled directly by the Enterprise Chamber, bypassing lower courts and reducing delays. Once the court decides on the merits of the case, the determination of the share price and the transfer of shares follow swiftly, with only one possible appeal to the Supreme Court. The court can also address related claims, such as damages or director liability, within the same procedure. To safeguard the company during the dispute, temporary measures – like suspension of voting rights or changes in management – can be imposed.

                  Determining the value of the shares is a crucial aspect of the process. Independent experts advise the court, taking into account all relevant circumstances and the parties‘ agreements. The court is not bound by these opinions and can adjust the price if it would otherwise be manifestly unfair. If the value of the shares has been reduced by the departing shareholder’s conduct, the court may award additional compensation to the affected party.

                  While the new scheme provides robust dispute-resolution mechanisms, Dutch law also encourages companies to prevent such conflicts from arising in the first place. This is best achieved by drafting clear articles of association and shareholder agreements, covering matters such as voting rights, decision-making processes, restrictions on share transfers, and dispute resolution clauses. For international investors and business owners, seeking proactive legal advice is recommended when setting up or investing in Dutch entities.

                  In summary, the new Dutch shareholder dispute resolution scheme offers international businesses a reliable, efficient, and fair way to resolve internal conflicts. Whether you are a majority or minority shareholder, understanding your rights and options under Dutch law is crucial. If you are considering doing business in the Netherlands or facing a shareholder dispute, consulting a Dutch corporate lawyer will help ensure your interests are protected and your agreements are future-proof.

                  Should you wish to explore practical examples of dispute clauses or receive advice tailored to your situation, do not hesitate to reach out for expert guidance.

                  New Regulatory Framework for RHQs: Tax Relief, Substantive Presence, and Streamlined Licensing

                  Saudi Arabia has released the long-awaited draft of the „Rules Regulating the Licensing and Supervision of Regional Headquarters of Multinational Companies,“ issued pursuant to Cabinet Resolution No. (338) dated 23/4/1445H. This regulatory framework, currently open for public consultation, forms part of the Kingdom’s ambitious Vision 2030 strategy to establish Saudi Arabia as the prime regional base for multinational enterprises (MNEs) operating in the Middle East and North Africa (MENA) region.

                  Far beyond mere tax incentives, the draft Rules introduce a binding, structured regime that combines regulatory clarity with strict compliance obligations and long-term benefits. The most salient features include the following.

                  30-Year Tax Holiday

                  Entities licensed as RHQs will enjoy a 0% income tax rate and a 0% withholding tax rate on dividends, related-party payments, and payments for services essential to RHQ activity. These tax incentives are granted for a period of 30 years, renewable under conditions set by the Ministry of Investment.

                  Operational Substance Requirements: RHQ Functions and Compliance

                  At the core of the RHQ regime lies the requirement for substantial and sustained business presence in the Kingdom. Licensed RHQs must activate both mandatory and optional activities as defined in Article 7 of the Rules:

                  Mandatory Activities (to be activated within the first year):

                  • Preparation and implementation of the regional strategy;
                  • Strategic coordination of the MNE’s operations in the region;
                  • Selection of products and services offered in the region;
                  • M&A support;
                  • Financial performance review;
                  • Budget planning for regional operations;
                  • Coordination of business units across MENA;
                  • Market research and competitor analysis;
                  • Identification of new market opportunities;
                  • Marketing strategy development;
                  • Preparation of operational and financial reports.

                  Optional Activities (minimum of three to be activated): These include, among others:

                  • Research, development and innovation;
                  • Sales and marketing;
                  • Human resources and training;
                  • Financial management, foreign exchange and treasury services;
                  • Legal consultancy, compliance, internal audit;
                  • Logistics, IP management, production, and technical support.

                  The selected optional activities must be aligned with the MNE’s global business strategy and must be regionally anchored.

                  Additional Substantive Requirements

                  • Minimum of 15 employees in the first year;
                  • At least 3 senior executives must be based in the Kingdom and must represent the top decision-making authority for the region;
                  • RHQ staff must reside in Saudi Arabia, be dedicated full-time, be licensed locally, and receive remuneration through Saudi bank accounts;
                  • RHQ operations must be exclusively performed within the Kingdom.

                  Licensing Process and Timing

                  The licensing process is clearly defined. Upon submission of the required documentation (commercial records, financials, activity plans), the Ministry of Investment will process the application within 30 working days.

                  True Regional Authority and Kingdom-Centric Operations

                  Licensed RHQs must hold administrative authority over all regional branches and subsidiaries. The RHQ must operate as the highest strategic, executive, and administrative authority in the MENA region. Furthermore, all RHQ-related activities must be carried out exclusively from within the Kingdom.

                  Localization Requirements

                  To ensure genuine local presence, the RHQ regime mandates:

                  • Saudi residency and work permits for all RHQ personnel;
                  • No hybrid or remote models from abroad;
                  • Local registration of intellectual property and commercial identifiers;
                  • Internal reporting and supervision obligations anchored in Saudi Arabia.

                  Is RHQ Establishment Mandatory or Optional?

                  While the RHQ license remains optional in principle, it is effectively mandatory for all multinational companies intending to contract with Saudi public sector entities.

                  As of 1 January 2024, the Saudi government will only consider public procurement contracts from companies that have an RHQ presence in the Kingdom, unless an express exemption is granted. Companies operating purely in the private sector without government contracts remain unaffected, but will nonetheless benefit from the RHQ regime if they choose to participate.

                  This regulatory shift creates a strategic filter: those seeking to participate in Saudi Arabia’s transformation across infrastructure, health, energy, and education must establish a fully embedded regional presence in the Kingdom.

                  Conclusion: High-Reward, High-Compliance Environment

                  The draft Rules represent a bold step in reshaping the MENA business landscape. Saudi Arabia is setting the bar high: generous tax relief and fast-track licensing are tied to substantive commitments in structure, personnel, and governance. For MNEs willing to assume regional leadership from within Saudi borders, the opportunity is as attractive as it is demanding.

                  In Spain, companies can be incorporated by legal entities or persons of any nationality, residing in Spain or abroad.

                  Incorporation by a natural person

                  The foreign citizen who intends to incorporate a Spanish company, and is not a resident in Spain, must obtain a Foreigner Identification Number/ Tax Identification Number (NIE/NIF) prior to the incorporation of the company before a Notary Public.

                  To obtain a NIE/NIF, he/she must, alternatively: (i) appear before the Spanish Consulate in his/her country of residence, or (ii) apply for it before the Immigration Office/Police Station in Spain; in both cases personally or through a representative. The representation will be accredited with sufficient power of attorney, in which it is expressly stated that the representative is authorised to present the application to obtain the NIE.

                  Once the NIE has been obtained, it must be communicated to the Tax Agency by presenting a Form 030, a photocopy of the passport and a photocopy of the NIE. Once the NIE has been communicated to the Tax Agency, the foreign citizen can now appear before a Notary Public to notarise the Deed of Incorporation of the company, presenting the following documents:

                  • The bylaws, with the minimum content required by Spanish law (Model Bylaws of a Public Limited Company, Model Bylaws of a Private Limited Company);
                  • The negative certificate of denomination issued by the Central Mercantile Registry (reservation of name for the company);
                  • In the case of monetary contributions, the deposit slip issued by the bank accrediting the disbursement of the initial contributions (or, if applicable, the corresponding amount in cash) is required. In the case of Limited Companies, the notary must provide bank proof of payment of a minimum of 3,000 euros, payment to be made directly by the individual who will be the owner of the company’s shares.
                  • If the foreign citizen planning to incorporate the company does not appear personally before the Notary, they may do so through a representative. The original power of attorney granted to the representative, duly legalized (by apostille or document legalization) and accompanied by sworn translation, must be provided.
                  • The original identification documents (national identity card or passport and NIE/TIE) of the persons who constitute the new company;
                  • The foreign investment declaration duly completed. Although merely informative, this mandatory document must be filed with the Foreign Investment Registry of the Ministry of Economy and Competitiveness within one month of the New Company’s incorporation. The notary can take care of it if requested (Form D-1A).

                  Incorporation by a legal entity

                  The foreign company that plans to incorporate a Spanish company must obtain a Tax Identification Number before the incorporation, in front of a Notary Public, by submitting an application form (EX15).

                  This application for a NIF must be signed by a legal representative of the company who, in the event of not being a legal resident in Spain (Spanish or foreigner with a residence permit), must obtain a NIE as a non-resident beforehand.

                  If a foreign company grants power of attorney to a legal resident in Spain to obtain the company’s NIF, the Tax Agency requires that the grantor of the power of attorney also have an NIE as a non-resident. If he does not have a NIE, the Tax Administration can grant him a provisional NIE by means of form 030, together with a photocopy of his passport.

                  Once empowered, this legal representative of the foreign company must sign the application for the census form (form 036) and this application must be presented, in person, at the Tax Agency office, enclosing:

                  • Census declaration (Form 036) signed by the person empowered by the foreign company requesting the NIF, and
                  • Power of attorney granted by the authorized representative of the non-resident entity, duly notarized and legalized (see “Legalization and translation of documents”), in which a legal resident person is appointed as representative of the non-resident entity for the purpose of obtaining the NIF.

                  Once the foreign company is registered with the Tax Agency, it can proceed with the incorporation.

                  Summary: Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt’s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt’s increasingly attractive transaction environment.

                  Egypt’s Position as a M&A Hub

                  In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet’s Information and Decision Support Centre (IDSC).

                  Key Drivers of M&A Growth

                  Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country’s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.

                  The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.

                  Mergers Vs. Acquisitions

                  Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.

                  A Merger is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:

                  • Gain a larger market share.
                  • Reduce operational costs.
                  • Expand into new regions.
                  • Boost profitability for shareholders after the merger.

                  An Acquisition involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:

                  • Purchase 100% of the target company’s shares, assets, and liabilities
                  • Acquire more than 50% of shares to gain controlling interest without full ownership

                  From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.

                  In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.

                  Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.

                  Egypt As An M&A Destination

                  Egypt’s control of the Suez Canal positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.

                  Egypt’s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa’s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.

                  The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt’s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa’s COMESA, and MENA & Gulf GAFTA.

                  Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt’s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt’s appeal to global businesses.

                  Overview of M&A activity in Egypt

                  Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.  The largest of these deals was UAE Global’s acquisition of 30% of Eastern Tobacco Company for more than 600 million dollars.

                  M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.

                  After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.

                  The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project’s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.

                  The Ras El Hekma mega project and the State Ownership Policy (including IPO initiatives) further highlight Egypt’s commitment to fostering investment-friendly conditions.

                  Most Notable M&A Deals and Transactions

                  The largest announced deal in Egypt in the first half of 2024 was ICON’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as Mövenpick Resort Aswan and Marriott Mena House Cairo this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.

                  Other notable deals in the first half of 2024 included B-Investments Holding’s acquisition of a majority stake in Orascom Financial Holding SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.

                  In June 2024, European Commission President Ursula von der Leyen announced that European companies had signed agreements worth over €40 billion with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.

                  Additionally, BP has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country’s efforts to export energy surpluses.

                  On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt’s fintech sector and supporting the country’s digital transformation and cashless economy.

                  Sector-Specific M&A Trends

                  The energy sector, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).

                  The healthcare and life sciences sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.

                  Egypt’s Green Hydrogen Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040.

                  Telecom Egypt signed a USD 600 million agreement with Hungary’s 4iG to develop a state-of-the-art fiber optic network across the country.

                  M&A activity is rising in the tech and digital sectors as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.

                  Foreign Involvement In M&A Transactions In Egypt

                  Egypt’s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.

                  Gulf Countries (Saudi Arabia, UAE, Qatar)

                  • Alignment with strategic plans like Saudi Arabia’s Vision 2030 and the UAE’s diversification initiatives.
                  • Active investments in real estate, construction, and renewable energy projects.
                  • Abu Dhabi, UAE – 16 December 2021: A consortium led by Aldar Properties (“Aldar”) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (“SODIC” or “the Company”) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.

                  European Union and Western Countries (UK, France, Germany)

                  • Trade agreements and EU partnerships provide preferential access to markets.
                  • EU’s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.

                  United States

                  The U.S.-Egyptian partnership has made significant contributions to Egypt’s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.

                  Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.

                  China and The Belt and Road Initiative

                  Egypt’s Vision 2030 and China’s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China’s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt’s increasing demand for advanced technology as it modernizes its economy.

                  Russia’s Role in Egypt’s Energy Sector

                  Russia plays a pivotal role in Egypt’s energy sector, particularly in nuclear power. Projects such as the construction of Egypt’s first nuclear power plant in Dabaa highlight Russia’s long-term economic involvement.

                  Key Laws Governing M&A Transactions

                  Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:

                  • Egyptian Employment Law (Law No. 12 of 2003) governs employment relations.
                  • Egyptian Income Tax Law (Law No. 91 of 2005) and the VAT Law (Law No. 67 of 2016) regulate tax matters related to M&As
                  • The Listing and De-listing Rules (Law No. 11 of 2014) and the 2023 FRA Decree govern securities on the Egyptian Exchange (EGX)
                  • Disputes in M&As are resolved under Egypt’s Arbitration Law (Law No. 27 of 1994), with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) providing a platform for cross-border disputes
                  • The CBE (Law No. 194 of 2020) monitors financial stability, supporting M&A transactions, while the
                  • Private Data Protection Law (Law No. 151 of 2020) governs data handling in private M&As.

                  Regulatory Authorities and Their Roles

                  Commercial practices and case law also influence M&A transactions. The following authorities oversee these processes:

                  • The General Authority for Investment and Free Zones (GAFI) governs corporate resolutions
                  • the Egyptian Financial Regulatory Authority (FRA) supervises financial transactions
                  • MISR for Central Clearing, Depository, and Registry (MCDR) handles financial tools and transactions
                  • the Egyptian Stock Exchange (EGX) manages listed securities
                  • the Central Bank of Egypt (CBE) regulates certain transactions, and the
                  • Egyptian Competition Authority (ECA) ensures compliance with competition laws.
                  • Other ministries, including the Ministry of Finance, Ministry of Transportation, and the Egyptian Drug Authority (EDA), may also be involved, depending on the nature of the transaction.
                  • Egypt has signed Double Taxation Agreements (DTAs) with over 60 countries, which can significantly impact the tax liabilities of cross-border M&A transactions. These agreements often provide reduced withholding tax rates on dividends, interest, and royalties, making Egypt a more attractive destination for foreign investors.

                  Recent Legal and Regulatory Reforms in Egypt

                  In recent years, Egypt has implemented several legal and regulatory reforms to improve the investment climate and strengthen the economy. Amendments to corporate law have updated shareholder rights, disclosure requirements, and introduced measures to enhance corporate governance and simplify cross-border transactions. The government has also prioritized digital transformation through the ‚Digital Egypt‘ initiative, aiming to digitize services like investment approvals and corporate registrations to reduce delays and increase transparency.

                  Corporate Law Amendments

                  • Egypt has updated itsCompanies Law (Law No. 159 of 1981) to strengthen shareholder rights and improve corporate governance.
                  • Amendments toListing and De-Listing Rules (FRA Decree No. 177 of 2023) introduced enhanced disclosure and transparency requirements for publicly traded companies.

                  Investment Law Updates

                  • TheInvestment Law No. 72 of 2017, amended by Law No. 160 of 2023, expanded tax incentives for specific projects and streamlined approval processes for foreign direct investment (FDI).
                  • TheGolden License Initiative introduced a fast-track investment approval process, reducing bureaucratic hurdles for major projects.

                  Competition Law Amendments and Pre-Approval for M&A

                  • Law No. 3 of 2005, as amended by Law No. 175 of 2022, introduced a mandatory pre-approval process for mergers and acquisitions.
                  • This ensures greater transparency in foreign investment transactions by requiring regulatory clearance before deals can proceed.
                  • The Egyptian Competition Authority (ECA) oversees compliance, ensuring that cross-border M&A deals do not lead to market monopolization or unfair competition.

                  Foreign Exchange Regulations for Currency Repatriation

                  • The Central Bank of Egypt (CBE) has introduced new foreign exchange regulations to address concerns about the repatriation of foreign currency earnings by international investors.
                  • These regulations are intended to ease capital movement restrictions and ensure that foreign investors can safely transfer their returns out of Egypt without bureaucratic delays.

                  New Tax Incentives for Industrial Investment Projects

                  • Egyptian Cabinet Decree No. 77 of 2023 provides additional tax incentives to industrial investment projects and their expansions.
                  • This decree complements (but does not replace) existing incentives under the Investment Law, offering further tax relief to encourage both new projects and expansionsin key industries.
                  • The new tax incentives improve Egypt’s attractiveness for cross-border industrial investment, especially in manufacturing, energy, and infrastructure development.

                  Foreign Ownership of Desert Land for Investment Projects

                  • Amendment to the Desert Land Law (3 January 2024) removes previous restrictions that required Egyptian nationals to hold at least 51% of company capital and limited individual foreign ownership to 30%.
                  • The amendment explicitly allows foreign investors to own desert land for investment purposes under the Investment Law’s provisions.
                  • This change significantly improves foreign investor confidence, particularly in sectors such as agriculture, renewable energy, tourism, and real estate development.

                  Updates to Regulations on Unlisted Securities Trading 

                  Egyptian Financial Regulatory Authority (FRA) Decision No. 303 of 2024, which amends Decision No. 94 of 2018, introduces the following key changes:

                  Increased FRA Approval Threshold:

                  • Previously, transactions exceeding 20 million EGPrequired FRA approval.
                  • Under the new amendment, this threshold has been raised to 60 million EGP, reducing regulatory burdens for mid-sized transactions.

                  Extended Bank Deposit Period for Securities Settlement:

                  • The settlement period for bank deposits related to securities transactions is now extended to two months.
                  • FRA approval is required for deposits exceeding this timeframe, ensuring regulatory oversight while allowing greater flexibility for cross-border investors.

                  Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

                  Key Ramifications of the GMT for Vietnam

                  The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

                  The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

                  Vietnam’s Response: Investment Support Fund and Proactive Measures

                  In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

                  Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

                  Eligible taxpayers can receive cash subsidies for five specific expense categories:

                  1. Human resource training and development
                  2. Research and development expenses
                  3. Fixed asset investments
                  4. High-tech manufacturing expenses
                  5. Social infrastructure systems

                  To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

                  In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

                  1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
                  2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
                  3. Considering cash grants for long-term qualified investments in high-tech industries

                  Conclusion

                  The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

                  Yang Jun

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