Amendments of the Importers’ Regist

The Egyptian President issued the first amendment to the Importers’ Registry Law (the “Law”) after almost 35 years of its issuance. The rationale of the amendments was to keep up with the most recent trends in commercial activities in Egypt. The Law had been issued at the beginning of the transformation of the Egyptian economy into a market economy which rendered its amendment a necessity to accommodate the current state of the Egyptian economy. 

Background

The Importers’ Registry Law was issued in 1982[1] setting out the framework for the importers’ registry and incriminating importation for commercial resale purposes absent registration. Pursuant to the executive regulations of the Law,[2] the General Organization for Export and Import Control holds the Importers’ Registry. The Law was not amended throughout these years up until the present amendment (the “2017 Law”)[3] which introduced changes to the registration requirements for individual and corporate importers, the amounts of fees as well as to the penalties to accommodate the change in the exchange rate of the Egyptian pound and the average income and to ensure that penalties are more realistic in light of the current economic situation in Egypt.

The Amendments

The 2017 Law has made several fundamental amendments, the most important of which are presented below.

1. Registration Requirements

The 2017 Law introduced a number of major amendments on the registration requirements. As far as individuals are concerned the amended provisions require that they have an annual turnover of at least two million Egyptian pounds in the year preceding their registration application pursuant to the tax return forms submitted to the Tax Authority. The amendments no longer exempt university degree holders from the requirement to having conducted commercial activities for at least two consecutive years prior to applying for registration. Furthermore, the amendments increase the minimum capital requirement for individual importers from EGP 10,000 to EGP 500,000. As for corporate importation vehicles, the 2017 Law classified companies into partnerships and limited liability companies on the one hand, and joint stock companies and limited partnerships by shares on the other. The first group of companies must have an annual turnover of EGP 5,000,000 during the year preceding the registration application and a minimum capital of EGP 2,000,000 (compared to EGP 15,000 according to the Law before amendment). For the second group of companies the minimum annual turnover and the minimum capital have become EGP 5,000,000 (similarly compared to EGP 15,000 before amendment since the Law before amendment did not distinguish between the different types of companies). The 2017 Law provides for a grace period for registered importers to comply with the minimum capital requirements within six months from the amendment of the executive regulations of the Law to be introduced within six months from the day following the publication of the 2017 Law. Most notable the 2017 Law introduced a change of stance on the Egyptian nationality requirement of shareholders, managers and board members of companies applying for registration. According to the amendments, only 51% of the share capital now need to be held by Egyptians and only the manager overseeing importation needs to be Egyptian. The 2017 Law further exempts companies carrying out production and services activities from registration for their imports of business requirements. This has been a rule that was provided for by other laws and that the Law had been silent on so far.

2. Increase of Fees and Harsher Penalties

The 2017 Law provides for significant increases in the amounts of fees. Most importantly the security deposit payable at registration, increased from EGP 3,000 to EGP 50,000 for individual applicants and EGP 200,000 for corporate applicants. Harsher penalties have also been stipulated. Crimes listed in the 2017 Law are punishable by a maximum of one year of jail time (compared to jail time of at least six months according to the Law before amendment) and/or a fine ranging from EGP 50,000 to EGP 1,000,000 (compared to a fine ranging from EGP 500 to EGP 2,000). According to the 2017 Law the competent minister may further suspend an importer’s registration if found in violation of a number of laws listed in the Law and has caused harm to consumers’ health or safety, national industry, national economy, public order or public morals.

Conclusion

Amending the Importers’ Registry Law after the lapse of such a long period of time since its enactment in 1982 was inevitable so that its provisions are more in line with the current economic situation. For instance, the amendments introduced by the legislator for the introduction of harsher penalties safeguard consumers’ interests and should have a more deterring effect. However, we believe that the wide powers granted to the competent minister in suspending certain importers should have been more defined as they could constitute a threat to importers should the government adopt a wide interpretation of what may be considered harmful to national industry, national economy, public order or public morals.   [1] Importers’ Registry Law No. 121/1982, Official Gazette, Issue No. 31, 5 August 1982. [2] Minister of Economy and External Trade Decision No. 343/1982 enacting the Executive Regulations of the Importers’ Registry Law No. 121/1982, Egyptian Gazette Issue 275 (cont.), 4 December 1982. [3] Law No. 7/2017 amending certain provisions of the Importers’ Registry Law No. 121/1982, Official Gazette Issue 9 (bis) (a), 7 March 2017.