By: Lamia Nabil
Minister of Investment Ossama Saleh is ready to intervene to solve the tax evasion dispute between Orascom Construction Industries (OCI) and the Egyptian Tax Authority (ETA), confirmed Yasser Moheb, from the Ministry’s press office.
“The ETA has the right to review all investment agreements in order to ensure the absence of suspicions over tax evasion,” said Moheb. He added that Egyptian law allows for dispute settlements away from the courts, with possibilities for the intervention of the Ministry of Investment through its dispute resolution committees and mediation centres if all previous legal attempts at a solution have failed.
“This is a positive initiative from the Government to start resolving the dispute,” said former Chairman of the ETA Ashraf Al-Araby, “especially since there is nothing to prevent the Ministry of Investment from intervening.”
“The ETA has the right to review the agreements for five years from the date of their tax declaration submission,” he continued. “I expect that this dispute will be concluded without any conditions from the ETA.”
The ETA submitted a tax bill demanding the company pay EGP 4.7bn in relation to the sale of Orascom Building Materials Holding (OBMH) to Lafarge SA in 2007, as clarified by the company in 4 March press release.
OCI then held two meetings with the Egyptian Tax Authority (ETA) last week to discuss tax evasion allegations directed at the company’s management. The meetings did not reach a conclusion, said sources, with a third meeting scheduled for Sunday.
Saleh also said it was unlikely that Nassef Sawiris would be seeking international arbitration over the case at the moment, according to media reports, since Egyptian law allows for many stages in domestic litigation procedures over such cases before such a step can be taken.
Saleh also said he had hopes that Sawiris’ “patriotic spirit” would hold him back from seeking international arbitration.
During Thursday’s trading session, OCI shares fell to a three-month low to reach EGP 230 per share, with the EGX 30, the Egyptian Exchange’s (EGX) benchmark index, dropping 2.1% on the same trading session.
Saleh also denied the seriousness of the crisis and its impact on the investment climate, though stressing the necessity to find quick solutions to resolve the dispute.
When contacted, OCI declined to comment on the matter.