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Tuesday, 21 July 2020

Parliament signs off on “corona tax” on salaries, Banking Act, EGX stamp tax + more

LEGISLATION WATCH- House signs off on 1% “corona” salary tax, Banking Act, EGX stamp tax + more: The House of Representatives approved yesterday the “corona tax” bill that will require companies to dock 1% from all employees’ gross monthly salaries until the end of the current fiscal year, Ahram Gate reports. All employees in both the public and private sectors will be subject to the tax, which will be in place for 12 months. Pensioners will get 0.5% docked from their monthly allowance during the same period. Proceeds from the tax will be placed in a special “epidemics and natural disasters” account at the CBE to support the drive to protect the nation from the pandemic.

The House finally passed the long-awaited Banking and Central Bank Act. In the works since 2017, the law gives the CBE more oversight of the sector and allows it to introduce measures governing e-payment, fintech and cryptocurrencies. It also strengthens data protection and consumer privacy. You can find out more about the details of the legislation from our previous coverage here, here, here and here.

Traders get tax break… Amendments cutting stamp tax on EGX transactions and the withholding tax on dividends also got the nod. Foreign investors will now pay a 0.125% tax on EGX trades (down from 0.15%) and residents will be taxed 0.075% (also down from 0.15%). The tax on dividends has been cut in half to 5% for foreign and resident investors alike. Read more here and here.

…and so will state-owned companies: The House passed amendments to the Income Tax Act that hand state-owned enterprises in which the government owns a minimum 51% stake a capital gains tax break. Under the changes, companies will not be charged capital gains tax on the sale of land to banks as part of debt settlements.

Billboards and roadside ads face new regulation, and we’re not sure that’s necessarily a bad thing. A new law passed yesterday will create a National Advertising Regulatory Authority to regulate issuing licenses for new roadside billboards (good) as well as ad content (meh).

The law governing the Sovereign Fund of Egypt got the okay after earlier receiving the go-ahead from the Council of State (Maglis El Dawla), Al Mal reports. The amendments provide VAT refunds to any company that is more than 50% owned by the SFE and its sub-funds (set up to attract investment to the logistics, renewables and manufacturing sectors) and limits the scope of legal action that can be taken against the fund, shielding the SFE and its coinvestors from third-party lawsuits.

Public Enterprises Act amendments pass: Amendments to the Public Enterprises Act that streamline the public sector, promote financial stability within state-owned enterprises and make management more accountable to shareholders were finally passed by the House yesterday. Read more about the legislation here and here.

A bill waiving interest and late fees on taxes was passed by the House. The measure waives 90% of the fees if the taxes are paid within two months after it becomes law, 70% if paid within four months, and 50% within six months. Late taxpayers that were able to clear their dues before the temporary law passed received a 100% exemption.

The state of emergency has been extended for three months.

Also approved in yesterday’s plenary session:

All bills passed into law yesterday now head to President Abdel Fattah El Sisi, who needs to sign off on the legislation before they are published in the Official Gazette and become law. Most will also require ministries to write and formulate executive regulations, which are also published in the Gazette.

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