Orascom Construction suspends tax payment to Egypt

Reuters, Wednesday 15 Jan 2014

OCI said that it had not been informed of any formal legal action from the Egyptian Tax Authority

Orascom Construction Industries (OCI) has suspended payment of a Dec. 31 instalment of a LE7.1 billion ($1.02 billion) tax settlement with Egypt's government, its Amsterdam-listed parent company OCI NV said on Wednesday.

The settlement was agreed last April, when Islamist President Mohamed Morsi was still in office, and related to claims the company had failed to pay LE14 billion of taxes on the 2007 sale of Orascom Building, an OCI subsidiary, to French firm Lafarge.

Morsi was ousted in July of last year, following mass protests nationwide.

The suspension was part of "the appeals and reinstated litigation process of OCI's ongoing dispute with the Egyptian Tax Authority", OCI NV's investor relations department said in an emailed response to a query from Reuters.

The government's tax dispute with OCI led to a travel ban on the firm's chief executive officer, Nassef Sawiris, and his father. The firm and its management were cleared of any wrongdoing.

OCI had been due to pay an instalment of 900 million pounds in December, according to a previous announcement. OCI NV is a global producer of natural gas-based chemicals and an engineering and constructing contractor.

Responding to a local media report that OCI had been referred to the prosecutor over the issue, the firm issued a statement to the stock market on Tuesday saying it had not been informed of any new formal legal complaints from the tax authorities.

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