Home | | Contact Us

Mysterious Taxation: Four Tax Laws

Mysterious Taxation: Four Tax Laws Are Issued and then “Frozen”
On 6 December 2012, the Official Gazette published four new Presidential Decree-Laws Nos. 101 to 104 of 2012, concerning the amendment of four laws pertaining to taxation of income, sales, real estate, and stamp duties. The announcement of these laws led to a wide spread confusion and resistance in public opinion, as a result of which the official spokesperson of the Presidency announced – in the early hours of the morning of 9 December 2012 – that the four laws were “frozen”. No further clarification was officially made. Following is a brief description of the four laws and an analysis of their current enforceability.
The First Law: Amendment to the Income Tax Law
Presidential Decree-Law No. 101 of 2012 amending certain provisions of the Income Tax Law No. 91 of 2005,[1] and including providing for a 25% income taxation (keeping the tax on petroleum and oil exploration companies to 40,55%), subjecting distributions of Investment Funds to taxation unless they are fully invested in securities, subjecting the change of legal form as well as mergers to taxation, amending the tax on royalties and service charges, and imposing a new 10% tax on the initial listing of securities in the Stock Exchange.
The Second Law: Amendment to the Sales Tax Law
Presidential Decree-Law No. 102 of 2012 amending certain provisions of the Sales Tax Law No. 11 of 1991,[2] and including increasing the tax rate on alcoholic beverages, cigarettes and other tobacco products, oils, fertilizers, steel, cement, fizzy drinks, touristic services, transportation, communications, as well as cleaning and security services.
The Third Law: Amendment to the Real Estate Tax Law
Presidential Decree-Law No. 103 of 2012 amending certain provisions of the Real Estate Tax Law No. 196 of 2008,[3] and including the postponement of the effective date to July 1st, 2013.
The Fourth Law: Amendment to the Stamp Duty Law
Presidential Decree-Law No. 104 of 2012 amending certain provisions of the Stamp Duty Law No. 111 of 1980,[4] and including amending the tax on credit facilities and loans, on advertisement, on some licenses and permits, and on the supply of water and electricity. What Does “Freezing” the Law Mean? As previously indicated, three days following the issuance of these laws, an official announcement by the Presidency declared them “frozen”, which led to some calming of public opinion on the basis that they were no longer applicable. However, from a strictly legal point of view, there is no such concept as “freezing” a tax, especially that no formal legal instrument to that effect has been issued. Accordingly, these taxes should be deemed in force until an official publication is made whereby they are cancelled, amended or postponed by law.   [1] Presidential Decree-Law No. 101/2012 amending certain provisions of the Income Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [2] Presidential Decree-Law No. 102/2012 amending certain provisions of the Sales Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [3] Presidential Decree-Law No. 103/2012 amending certain provisions of the Real Estate Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [4] Presidential Decree-Law No. 104/2012 amending certain provisions of the Stamp Duty Law, Official Gazette, Issue No. 49 (bis), 6 December 2012.
On 6 December 2012, the Official Gazette published four new Presidential Decree-Laws Nos. 101 to 104 of 2012, concerning the amendment of four laws pertaining to taxation of income, sales, real estate, and stamp duties. The announcement of these laws led to a wide spread confusion and resistance in public opinion, as a result of which the official spokesperson of the Presidency announced – in the early hours of the morning of 9 December 2012 – that the four laws were “frozen”. No further clarification was officially made. Following is a brief description of the four laws and an analysis of their current enforceability.
The First Law: Amendment to the Income Tax Law
Presidential Decree-Law No. 101 of 2012 amending certain provisions of the Income Tax Law No. 91 of 2005,[1] and including providing for a 25% income taxation (keeping the tax on petroleum and oil exploration companies to 40,55%), subjecting distributions of Investment Funds to taxation unless they are fully invested in securities, subjecting the change of legal form as well as mergers to taxation, amending the tax on royalties and service charges, and imposing a new 10% tax on the initial listing of securities in the Stock Exchange.
The Second Law: Amendment to the Sales Tax Law
Presidential Decree-Law No. 102 of 2012 amending certain provisions of the Sales Tax Law No. 11 of 1991,[2] and including increasing the tax rate on alcoholic beverages, cigarettes and other tobacco products, oils, fertilizers, steel, cement, fizzy drinks, touristic services, transportation, communications, as well as cleaning and security services.
The Third Law: Amendment to the Real Estate Tax Law
Presidential Decree-Law No. 103 of 2012 amending certain provisions of the Real Estate Tax Law No. 196 of 2008,[3] and including the postponement of the effective date to July 1st, 2013.
The Fourth Law: Amendment to the Stamp Duty Law
Presidential Decree-Law No. 104 of 2012 amending certain provisions of the Stamp Duty Law No. 111 of 1980,[4] and including amending the tax on credit facilities and loans, on advertisement, on some licenses and permits, and on the supply of water and electricity. What Does “Freezing” the Law Mean? As previously indicated, three days following the issuance of these laws, an official announcement by the Presidency declared them “frozen”, which led to some calming of public opinion on the basis that they were no longer applicable. However, from a strictly legal point of view, there is no such concept as “freezing” a tax, especially that no formal legal instrument to that effect has been issued. Accordingly, these taxes should be deemed in force until an official publication is made whereby they are cancelled, amended or postponed by law.   [1] Presidential Decree-Law No. 101/2012 amending certain provisions of the Income Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [2] Presidential Decree-Law No. 102/2012 amending certain provisions of the Sales Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [3] Presidential Decree-Law No. 103/2012 amending certain provisions of the Real Estate Tax Law, Official Gazette, Issue No. 49 (bis), 6 December 2012. [4] Presidential Decree-Law No. 104/2012 amending certain provisions of the Stamp Duty Law, Official Gazette, Issue No. 49 (bis), 6 December 2012.