Parliament passes new financial laws

Gamal Essam El-Din , Tuesday 7 Jul 2020

Parliament has moved to pass legislation aimed at generating more state revenue at the start of the new financial year, reports Gamal Essam El-Din

Parliament passes new financial laws
photo: Khaled Meshaal


Before it adjourns for the summer recess at the end of this month, Egypt’s parliament, the House of Representatives, has passed a number of financial laws.

At the top of the list is a law that will make an additional allocation of LE80 billion to the new 2020-21 budget. Minister of Finance Mohamed Maait told MPs on Sunday that the new allocation was necessary to settle part of the Ministry of Electricity’s debts to the Ministry of Petroleum.

“These debts have reached a total of LE102 billion, and we want to use the additional budgetary allocation to settle part of this,” Maait said.

He also indicated that part of the new allocation would be used to pay part of the total of LE160.5 billion in government installments that are due to the Insurance and Pensions Authority.

Maait said the outbreak of the Covid-19 pandemic had made it difficult to settle the payments, and so it had been necessary to find an additional allocation of LE80 billion in order to do so while cutting the public debt.

He said that it had been agreed two weeks ago that both the House of Representatives and the Finance Ministry would revise the new 2020-21 budget at the end of the first quarter of the year on 30 September to see whether any changes needed to be introduced.

Also approved on Sunday was a new law aimed at setting up a Takaful (solidarity) fund with the Central Bank of Egypt (CBE) to mitigate the negative impacts of pandemics and natural disasters.

Maait said the bill, officially called Mutual Support to Mitigate the Economic Consequences of the Spread of Pandemics and Natural Disasters, was not part of the 2020-21 budget.

“Not a single Egyptian pound in the proposed Takaful fund will be used to shore up public finances or support the state treasury,” Maait said on Sunday. “The proceeds will be put in a special fund or account with the CBE to be used to contain the economic consequences of pandemics and natural disasters, develop and maintain the healthcare system, and provide subsidies for coronavirus-impacted workers, individuals and families,” he added.

Article 1 of the draft law states that one per cent will be deducted from the monthly net income of state employees beginning from 1 July and lasting for one year in order to build capital for the fund. Article 2 states that 0.5 per cent of the net pensions of retired employees will also be deducted for the same duration.

The draft law states that state employees and pensioners who receive less than LE2,000 in net income per month will be exempted from the deductions. Maait said the deductions were expected to generate between LE8 and LE10 billion in revenues.

Parliament also approved on Sunday a draft law that aims to help settle tax disputes by allowing the Finance Ministry to waive late fees and interest chargeable on unpaid taxes. The bill, an amendment to four articles in the law on the settlement of tax disputes (Law 79/2016), aims to encourage taxpayers to clear their tax payments on time without facing fines or arrears.

“The bill authorises the Finance Ministry to waive interest and late fines on income, value-added, and real estate taxes,” the law says, adding that “it  allows the Finance Ministry to waive 90 per cent of fines if taxes are paid within two months of the law going into effect, 70 per cent if they are paid within four months, and 50 per cent if paid within six months. Late taxpayers who are able to settle their fines and dues before the law was passed will receive a 100 per cent exemption.”

Maait indicated that Law 79/2016 would help the Finance Ministry collect as much as LE160 billion in taxes due and arrears. “This law mainly targets chronic late taxpayers like the National Railways Authority and the state-owned national press organisations, encouraging them to settle their tax dues,” he said.

Parliament also approved a two-article law that allows the Finance Ministry to issue loan guarantees in favour of the Water Holding Company so that it can borrow LE3 billion to implement desalination projects in the Mediterranean city of Marsa Matrouh and the Red Sea cities of Qusseir, Safaga, and Marsa Allam.

Also receiving approval during Sunday’s plenary session were amendments to Law 141/2014 on small-scale industries. These offer new financial facilities to medium and small-sized enterprises to help them to overcome the negative impacts of the coronavirus crisis and meet industrial and commercial needs.

The session on Sunday also included approvals of amendments to Law 182/2018 on public contracts. The new law allows the government to settle payments it owes to public contractors through non-banking financial-service providers alongside the existing option of settling through the banks.

Also approved on Sunday was an anti-cheating bill that will impose fines and possible jail terms on those found guilty of illegally obtaining and leaking exam materials via social media. Convicted offenders will be sentenced to between two and seven years in jail and fines ranging from LE100,000 to LE200,000.

Any student caught cheating during exams will be considered to have failed the exam and will be excluded for two years. Any student caught cheating by means of mobile phones or wireless devices during exams will face a penalty of one year in jail and a fine ranging from LE5,000 to LE10,000.

On Monday, parliament approved three additional financial laws that regulate other sectors. Topping the list was an amended law that will increase the financial bonuses granted to doctors and medical staff in charge of treating patients infected with the coronavirus or other epidemic diseases.

The bill, an amendment to an 18-article law regulating the affairs of the medical professions (Law 14/2014), will set up a compensation fund to help doctors and medical staff who are on the frontlines of fighting the coronavirus while treating patients in hospitals.

Doctors will receive an additional bonus of LE1,225 per month; dentists, pharmacists, veterinarians, and physiotherapy specialists will obtain an extra LE875 per month; nursing specialists, chemists, and physicists will receive an extra LE790 per month; and nursing and healthcare technicians will receive an extra LE700 per month.

Also approved on Monday was an amendment to four articles of the law regulating the expropriation of private property to be used in public interest projects (Law 10/1990). Maait said that the law guarantees that owners whose private property is to be expropriated to be used in state-funded projects can obtain fair financial compensation through simplified procedures.

MPs also passed an amendment to two articles of the intellectual property law (Law 82/2002), with the objective of sponsoring talented individuals who are less than 21 years old and are talented in the area of audio-visual production.

“Such individuals will be listed as the owners of intellectual property rights against a payment of just LE100, instead of LE1,000, and talented but physically challenged individuals will be exempted from any fee payments,” the law says.



*A version of this article appears in print in the 9 July, 2020 edition of Al-Ahram Weekly


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