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EGYPT
ISRAEL
JORDAN
KUWAIT
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EGYPT
Although the legal structure in Egypt is based upon a civil code, because of its complex history, its legal system combines elements of Turkish, Napoleonic and Islamic principles with a highly intricate and challenging system of state regulation.
Egypt can be a challenging environment for processing legal disputes through the court system. The average commercial case takes six years to litigate, and appeals will extend the process significantly, up to 13 years. Egyptian law does not provide for punitive damages or a right of disclosure. Our attorneys routinely counsel clients to seek the earliest opportunity for informal dispute resolution.
The major industries in Egypt are tourism, oil, gas, and cotton. Other industries include textiles, chemicals, food processing, construction, cement, and metals.
The commercial environment for foreigners has improved significantly since the passage of new investment laws in 1997. Egypt now allows full foreign ownership of ventures and guarantees the right to remit income and repatriate capital. There are also new legal guarantees against confiscation, sequestration, and nationalization. Foreigners may now own land within two miles of cities; land beyond that is considered “desert land” and may only be owned by Egyptian-controlled (51 percent minimum) entities. Foreigners may not own agricultural land.
Tax holidays of five years are granted to all joint stock companies employing more than 50 employees. After these five years, joint stock companies are granted a deductible allowance equal to the going interest rate on bank deposits. Taxes are only charged when the rate of return is above the market rate of interest (approximately 10.5 percent at mid 2005).
Tourism remains among the more important parts of the Egyptian economy. Tourist projects, including hotels, are given a five-year tax holiday, which can be extended to ten years for projects in remote areas.
Energy is also a major foreign investment focus. Oil and gas concessions are based on production sharing arrangements between the Egyptian government, the Egyptian General Petroleum Corporation, and foreign oil companies. Contractors are given an initial exploration phase of three to four years. If oil is not found during that period the contract terminates. Foreigners also invest in many other Egyptian industries; however, projects outside of oil, gas, and tourism are not automatically approved and must go through an often-lengthy approval process, which can act as a deterrent to foreign investment. Special permission is required to invest in military-related industries. Foreigners may invest in agricultural projects but cannot majority own them when this would involve majority-ownership of agricultural land.
Patton Boggs has been active in Egypt for 20 years. We have advised the Egyptian military, the Egyptian Economic Development Agency, and have handled arbitrations and litigation on the government’s behalf in Europe and the US. Our attorneys also represent some of the leading Egyptian commercial families and their companies, and we have been involved in oil and gas and telecommunications infrastructure projects on their behalf. One of our partners also served as the Chairman of the US-Egyptian Chamber of Commerce, promoting foreign direct investment into targeted sectors of the Egyptian economy. We have also handled negotiation of offset agreements and managed contractor disputes in military sales agreements arising under the US Foreign Military Sales Act.
Patton Boggs maintains a correspondent affiliate relationship with one of Egypt’s most prominent firm of lawyers in Cairo, the law firm of Zaki Hashem.
AFFILIATION
Law Offices of Zaki Hashem
Contact: Yaber Zaki Hashem Esq.
23 Kasr El Nil Street
Cairo, Egypt
Telephone Number: 011-2010-1010030
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