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Monday, 21 September 2020

Egypt parliament approves CBE, coronavirus tax law

Parliament also approved a number of major economic legislations, at the top of which is the law regulating the performance of the public enterprise companies

Gamal Essam El-Din , Monday 20 Jul 2020
Parliament
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Egyptian MPs voted on Monday in favour of a number of major economic legislations.

Parliament speaker Ali Abdel-Aal took the final vote after more than two-thirds of MPs attended the plenary meeting on Monday morning.

Topping the list of laws approved is one aimed at regulating the performance of the Central Bank of Egypt (CBE) and the banking sector.

The law, whose 294 articles were discussed and passed by MPs in a plenary meeting on 17 May, has been referred to the State Council to be revised in constitutional and legal terms. Article 21 of the law states that the CBE’s governor, his two deputies, and board members shall not be members of any political party or government body.

The law also aims to raise the CBE’s capital to EGP 20 billion to help it exercise its financial obligations. The CBE governor will be named by the president of the republic and ratified by parliament. The governor will stay in office for a once-renewable four-year term.

The law stipulates that banks operating in Egypt should have capital of at least EGP 5 billion and representation offices should have capital of at least EGP 150 million.

The law creates a new system for settling the conditions for defaulting banks, with the objective of maintaining the stability of the banking sector and protecting the interests of depositors.

It also aims to catch up with the latest developments in the banking sector and operations and services such as e-payments, fintech businesses, and cryptocurrencies.

Parliament also voted in favour of government-drafted amendments to the law on public enterprise companies (203/1991). The law, approved in principle by parliament in a plenary session on 7 June, includes amendments to 29 articles. Final approval was postponed until the draft law was revised by the State Council.

The amendments to the public-sector companies’ law faced objections from workers and their representatives in parliament when it came up for discussion last May.

Committee member and General Federation of Trade Unions (GEFTU) Secretary-General Mohamed Wahba said the amendments opened the way for privatising public-sector companies in a way that is detrimental to the interests of thousands of workers.

“Article 38 of the newly amended law states that a company incurring losses that exceed half its capital shall be liquidated,” Wahba said, adding that this would push 40 percent of companies into liquidation and harm thousands of workers.

Another law that also took a final vote is one that imposes a 1 percent “coronavirus tax” on the salaries of state and public sector employees and 0.5 percent on retired people.

The Takaful (solidarity) law will collect the proceeds of the tax in a fund that will be used to help fight the coronavirus pandemic that has swept the country since March.

MPs also finally voted in favour of laws on the stamp tax, the income tax, general contracts, the Fund of Caring for the Innovative and Genius Individuals, regulating advertisements on public roads, the Egypt Sovereign Fund, and waiving tax arrears. Another law that allows the minister of finance to give a guarantee to the Drinking Water Holding Company to borrow EGP 3 billion to implement projects was also approved.

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