Amendment of the Law on the Settlem

On 27 February 2018, Law No. 14 of 2018 (“Law 14/2018”)[1] was issued amending the Law on the Settlement of Tax Disputes and extending its application for two more years. The amendment introduced explicit reference in the law to tax disputes arising with the Real Estate Tax Authority, in contrast to the previous provision which limited the scope of the law to disputes arising between tax payers and the Egyptian Tax Authority. Moreover, a statement by the Minister of Finance elaborated that the law has been extended for two more years in order to expedite the resolution of tax disputes in relation to income tax, sales, VAT, and real estate taxes.

Background

In September 2016, Law No. 79 of 2016 for the Settlement of Tax Disputes (the “Law”)[2] was enacted to replace two laws issued in 1997 and 2013 respectively[3]  in order to regulate cases that are filed before the courts concerning disputes arising between the tax authority and taxpayers. While similar to previous regulation in some of its provisions, the new Law carried some prominent distinctions. This includes granting greater power to dispute settlement committees than that which used to be given to reconciliation committees under previous laws. The committee’s recommendation is mandatory to the government but optional to the private sector party, as the latter may decide to refuse the recommendation and continue with the regular route of court litigation. The scope of the new Law also differed. Previous tax reconciliation laws, like repealed Law No. 159 of 1997, provided for a reconciliation procedure that was applicable to lawsuits filed with the courts up to the date of the application of the law. This meant that lawsuits filed following that date were not eligible for settlement. Law No. 163 of 2013 extended that period to December 2013. In contrast to those two previous laws, Law No. 79 of 2016 made settlement available for lawsuits in existence at the time of the application of the Law, and those which started a year after. This is an important distinction provided under Article (8) of the Law which stipulated that it is applicable for a period of one year from the date of its publication i.e. until September 2017. Finally, while previous reconciliation laws allowed the tax authority alone to initiate tax dispute reconciliation proceedings by filing a request before court for a stay of litigation until the reconciliation route is exhausted, the new Law now allows the taxpayer to present a request for settlement to the tax authority, which in turn refers the matter to the relevant dispute resolution committee to determine whether there is serious ground. This could lead to a mandatory suspension of litigation until the relevant committee looks into the dispute. The stay period was also reduced to three months as opposed to nine months previously. Following the issuance of the Law, the Ministry of Finance issued Decree No. 389 in November of 2016, forming tax dispute settlement committees, each according to a tax dispute specialization. The committees fall under the supervision of the Supreme Committee for the Settlement of Tax Disputes that is headed by the Deputy of the Minister of Finance for Tax Policy, and their formation may not include members from the tax authority.

Present Amendment (Law 14/2018)

Law 14/2018 issued last February revives the application of the Law which ended on 27 September 2017 for two more years. It also states that committees that have been formed pursuant to the Law are to remain in operation and continue handling disputes that have not been resolved yet, as well as those that are filed following the issuance of Law 14/2018. In addition, Article (1) of the Law was amended to explicitly include disputes with the Real Estate Tax Authority in the scope of the Law. Prior to amendment the provision referred to disputes “between taxpayers and the Egyptian Tax Authority arising from the application of income tax, and other tax related laws which the authority applies”.

Minister of Finance Statement[4]

In a statement issued on the website of the Ministry of Finance this week, the Minister revealed that the current formation of some tax dispute committees was under reconsideration, and that a number of new committees will be added in order to look into value added tax and stamp duty related disputes. In addition, the statement said that following the amendment of the Law, six new committees were going to be formed in different governorates to handle real estate tax related disputes. The statement also mentioned that the Egyptian Tax and the Real Estate Tax authorities are now ready to receive tax settlement requests in application of the Law.   [1] Law No. 14/2018 amending certain provisions of Law No. 79/2016 on the Settlement of Tax Disputes and extending its application, Official Gazette, Issue No. 8 (bis) (e), 27 February 2018. [2] Law No. 79/2016 on the Settlement of Tax Disputes, Official Gazette, Issue No. 38 (bis) (c), 26 September 2016. [3] Law No. 159/1997 on Reconciliation in Tax Disputes, Official Gazette, Issue No. 49 (bis), 9 December 1997; Law No. 163/2013 on the Reconciliation in Tax Disputes, Official Gazette, Issue 49 (bis) (b), 11 December 2013. [4] Minister of Finance Statement after the President extended the application of Law on the Settlement of Tax Disputes by two years, available through this link (Arabic).