Orascom Construction Offers US$350 Mln First Installment For Egypt Tax

Orascom Construction Industries (OCIC.CA) is offering to pay US$ 350 million as a first installment seeking to reconcile with Egypt’s Tax Authority over taxes dues worth EGP 7.1 billion. OCI said to pay off the rest of the tax dues in a number of installments through the coming years.

Sources near from the Group said OCI has refused to pay the EGP 7.1 billion as one tranche due to reasons related to default on payments besides the lack of a sufficient liquidity for the current phase.

The sources had formerly agreed with the Egyptian Tax Authority (ETA) to pay off US$ 500 million and the rest shall be paid off on several installments. However, when the agreement was about to come into effect, OCI offers to pay only US$ 350 million followed by pledges to pay off a number of installments within the coming years.

Sources further stated that the ongoing negotiations between the OCI and the tax authority will be concluded very soon after reaching an agreement in which Orascom would pay off EGP 7.1 billion to end a 7-month tax disputes  over EGP 14 billion tax evasion claims erupted by selling Orascom Building Materials to French Lafarge for EGP 68.6 billion in 2007.

Amwal Al Ghad has quoted Tax Authority Chief Mamdouh Omar by saying the negotiations with the OCI are still ongoing, asserting that the reconciliation option is very attainable at any moment. Omar has denied that the ETA’s negotiations with OCI have reached a deadlock.