The Egyptian government and the Central Bank of Egypt (CBE) said that the confidentiality of customer accounts in banks is not compromised.
The Egyptian market witnessed a state of anxiety during the past few days, after it was reported that the Ministry of Finance proposed an amendment to the Tax Procedures Law to allow the disclosure of bank customer information.
The CBE said, in a statement, that the draft law amending some provisions of the Unified Tax Procedures Law submitted by the government is only related to exchanging information with foreign tax authorities and not with the Egyptian Tax Authority for domestic purposes.
CBE stressed that the aforementioned draft law does not affect the confidentiality of bank customers’ accounts in Egypt, for which CBE and the Banking System Law has set strict guarantees to protect them.
The law states that it is not permissible to view these accounts or give data about them to any party, directly or indirectly, except with a written permission from the owner of the account, deposit, trust, or treasury, or from one of his heirs, or from one of the legatees for all or some of these funds, or from his legal representative or his agent, or based on a court ruling or arbitral award.
For its part, the government denied submitting a draft law that would allow the tax authority to access citizens’ bank accounts.
A statement by the Cabinet’s Media Center said that some websites and social media pages circulated news about the government’s submission of a draft law to amend the Unified Tax Procedures Law, which includes allowing the Tax Authority to view citizens’ bank accounts.
The center stated that it had contacted the Ministry of Finance, which denied the news, stressing that the draft legislative amendment proposed to the unified tax procedures law, which is currently being discussed by the parliament, does not affect the confidentiality of bank accounts for Egyptians, nor companies or institutions operating in Egypt. It is limited only to assisting some foreign countries in verifying the commercial transactions of their nationals, in order to deal with tax evasion. It is permitted to disclose information among banks for the purposes of information exchange, in implementation of the provisions of the international tax agreements in force in Egypt.
It pointed out that in 2016, Egypt joined the Global Forum on Transparency and Exchange of Information for Tax Purposes, which was established by the G20 and the Economic Cooperation Organization. The joining came with the aim of combating tax evasion, and evaders concealing their wealth and financial assets, by applying international standards for the exchange of information for tax purposes.
The tax Authority indicated that within the framework of this forum, the performance of the countries joining it is evaluated to determine the extent of their commitment to the standards of transparency and information exchange, through a peer review group. In the case of a low evaluation, some conservative measures are applied.
It added that this proposed legislative amendment is an international obligation on Egypt that must be fulfilled, and gives Egypt the right to reciprocate with 172 countries in the world that have joined this international agreement worldwide.
The Egyptian Tax Authority also confirmed that the proposed legislative amendment to the Unified Tax Procedures Law does not affect the confidentiality of bank accounts for Egyptians, nor companies or institutions operating in Egypt, and that it is only related to the exchange of information with foreign tax authorities and not with the Egyptian Tax Authority for local purposes. This system has been in place between the United States of America and Egypt for a long time according to the American Tax Compliance Act “FATCA”.
The authority explained that many international financing institutions, including, for example, the European Reconstruction Bank, have begun to take into account the assessment issued by this forum, as one of the indicators for measuring the extent to which countries adhere to those international standards for deciding granting financing facilities, and technical or financial assistance.
It added that the Technical Assistance Team of the Organization for Economic Co-operation and Development mentioned, during its visit to Egypt in March 2020, some legislative requirements necessary to pass the assessment, including allowing the exchange of banking information, in implementation of the provisions of international tax agreements. A date has been set for a peer review to Egypt during the last quarter to determine the extent of its commitment to the standards of transparency and exchange of information.
It pointed out that the Peer Review Committee in Egypt recommended that the unified tax procedures law stipulate that the provisions of the law should not be prejudiced.