Egypt: Sawiris’ OCI Declines to Pay EGP900mn Tax Arrears

Egyptian Tax Authority (ETA) has referred to the country’s public prosecution a cheque issued by Orascom Construction Industries (OCI) with ‘payment stopped’, according to an official in the country’s Ministry of Finance spoke to Amwal Al Ghad on Thursday.

ETA is seeking to take timely legal measures since OCI – which is owned by Egyptian business tycoon Nassef Sawiris – declined to pay the second installment of tax claims amounting to EGP 900 million.

The second installment should have been paid to ETA on December 29, 2013 as pursuant to the tax settlement reached between OCI and the Egyptian government.

Moreover, the official source said OCI had deposited a cheque worth EGP 900 million to pay the second installment at the Commercial International Bank of Egypt (CIB) by the end of last December. Yet, OCI had later ordered to stop the payment of the cheque and accordingly ETA received the cheque on which the phrase ‘payment stopped upon the client’s request’ were written.

Consequently, ETA had referred the cheque to the Cases Department which had been later submitted to the Public Prosecution filling a criminal misdemeanor against OCI.

The Egyptian government will not give up the country’s rights, the source noted, elaborating that OCI would be fined over pay-to-delay payments in addition to paying the second installment.

It is worth to mention that in the aftermath of June 30 Uprising and the removal of Muslim Brotherhood-led president Mohamed Morsi, Egyptian tycoon Naguib Sawiris had expressed the family’s plans to lodge a suit against the ETA.

Sawiris family intends to drop debts totaled EGP 7.1 billion and restore the first installment in the amount of EGP 2.5 billion paid by OCI, the Egyptian tycoon said, citing a politically-driven plans to force Orascom Group to pay the payments during the Islamist regime.

OCI’s tax claims resulted from the sale deal for its cement unit to France’s Lafarge. The company agreed with Egypt’s government to pay the ETA ten installments during 2013 – 2017 totaling EGP 7.1 billion less EGP 182 million in existing tax credits to end a dispute regarding tax claims for the years 2007 to 2010.

As pursuant to the settlement deal, OCI pays EGP 2.5 billion (US$ 350 million) as the first installment followed by EGP 900 million by the end of December, 2013; whereas the remaining installments are distributed as paying EGP 500 million every six months.