Amendment to the Fine for Failure t

The Ministry of Finance recently issued two consecutive decisions (No. 305 of 2019, and 312 of 2019) that have bearing on a previous regulation mandating that payments made to government entities and public bodies be received electronically through an e-payment system to be set in place by the Ministry of Finance.

Background

In parallel to other moves by the government to gradually shift towards a society that is less reliant on cash, the Ministry of Finance issued in July 2018 decision No. 269 of 2018 (“Decision 269/2018”),[1] setting thresholds for the collection of government receivables and dues, including taxes and customs, according to which payments to said entities that are above EGP 100,000 must be made electronically. As an exception, Decision 269/2018 provided that payments up to EGP 5,000 could be made in cash and that payments between EGP 5,000 and 100,000 could be made by check or electronically. It also stated that the thresholds will only apply up to 1 January 2019, following which all government receivables, regardless of their value will have to be made through the e-payment system, while imposing a fine (in the form of administrative fees) of 10% of the amount paid in cash for failure to make electronic payment. An amendment to Decision 269/2018 that was issued in December 2018 extended the deadline, after which these thresholds were to be entirely abolished, to 1 May 2019, and set a new threshold beginning with May 2019 by which the collection of any government receivables above EGP 500 must be made electronically while those below the said value could be made through any payment method.[2] That amendment also enabled the Minister of Finance to exempt certain agencies or receivables from the requirement of using the e-payment system if they lack the necessary mechanisms or procedures for electronic collection.

Decisions No. 305 and 312 of 2019

Published on 30 April 2019, decision No. 305 of 2019 (“Decision 305/2019”)[3] provided an exemption from the application of the 10% fine of the cash value for failure to make electronic payment. The exemption from the fine applies where electronic payment through the Ministry’s e-payment system cannot be attained. Decision 305/2019 then goes on to say that areas in which a state of emergency has been declared shall be considered as a case where electronic payment cannot be attained. However, on 2 May 2019, the Ministry issued another decision No. 312 of 2019 (“Decision 312/2019”),[4] covering the same matter which replaced the fine provision entirely, stating that the fine will now be 5% of the cash value (with a maximum of EGP 7,000 instead of the original 10,000), starting 16 June 2019; hence also extending the deadline following which a fine shall be applied for failure to make electronic payment. Decision 312/2019 did not repeal previous Decision 305/2019, albeit it has replaced the same provision that had been amended by Decision 305/2019. It is thus not entirely clear whether the Ministry of Finance intended that the fine be exempted where the e-payment system cannot be used – in accordance with Decision 305/2019 – up to the deadline of 16 June 2019 that was newly provided under Decision 312/2019, following which the applicable fine will be equal to 5% instead of 10% of the cash value. If such is indeed the case, a clarification might be required from the Ministry of Finance.   [1] Ministry of Finance Decision No. 269/2018 on the collection of government receivables including taxes and customs through the electronic payment and collection system, Egyptian Gazette, Issue No. 148 (cont.), 2 July 2018. [2] Ministry of Finance Decision No. 760/2018 amending certain provisions of Decision No. 269/2018 on the collection of government receivables, including taxes and customs, through the electronic payment and collection system, Egyptian Gazette, Issue No. 294 (cont.), 29 December 2018. [3] Ministry of Finance Decision No. 305/2019 exempting certain government entities and dues from the application of Minister of Finance Decision No. 269/2018, Egyptian Gazette, Issue No. 99 (cont.) (b), 30 April 2019. [4] Ministry of Finance Decision No. 312/2019 amending certain provisions of Decision No. 269/2018 on the collection of government receivables and taxes through the electronic payment and collection system, Egyptian Gazette, Issue No. 100 (cont.), 2 May 2019.