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Wednesday, 30 October 2019

Egypt’s industry federation lobbies for more changes in draft Customs Act

LEGISLATION WATCH- FEI wants to extend the customs exemption in the draft Customs Act: The Federation of Egyptian Industries (FEI) is pushing for changes to the draft Customs Act that would extend the customs exemption period for importers of raw materials by six months, according to a memo seen by the press. The current legislation grants manufacturers and exporters with a one-and-a-half year exemption period, which can be extended by a further year. The FEI’s proposal would increase this period to two years (or three years with the extension). The federation joins the Egyptian Businessmen Association, which called for the same changes last week.

Who would this affect? The draft that is currently in the hands of our legislators grants temporary duty exemptions for a period of one-and-a-half years for intermediary goods imported by manufacturers and exporters. The importer would have to submit a bank guarantee until the goods are exported within the set period, which can be extended for an additional year.

Proposals for sector-specific exemption periods: FEI deputy head Mohamed Saad El Din suggested that lawmakers legislate different exemption periods for different sectors. The reasoning? A more flexible system would better suit industries whose production cycles extend beyond or fall short of two years.

Federation also wants customs and import fee refunds to be made after two years: The memo asked that intermediate goods for which an exemption wasn’t granted be eligible for a refund within two years, instead of one as is currently the case in the draft law. This would apply to raw materials brought in by local exporters, goods which have been moved customs-exempt special economic zones, or those sold to an entity not subject to customs duties. The rationale here is the same as above: To give companies enough time to produce their goods and export them.

And better wording in violation articles: The FEI wants to draw a line between customs evasion and more serious cases of substance or weapon trafficking. Only the latter cases deserve prison sentences, Saad El Din said.

Background: The amendments are part of larger changes that aim to expedite customs clearance, create a “whitelist” of trusted importers, and broaden the Customs Authority’s discretion. They would also include customs breaks to incentivize local manufacturers. They are currently pending committee-level approval before they are placed up for a final vote in a general assembly meeting and signed into law by the president.

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