{"id":622480,"date":"2018-10-02T04:15:03","date_gmt":"2018-10-02T04:15:03","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2018\/10\/02\/the-fourth-legislative-session-of-the-house-of-representatives\/"},"modified":"2018-10-02T04:15:03","modified_gmt":"2018-10-02T04:15:03","slug":"the-fourth-legislative-session-of-the-house-of-representatives","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2018\/10\/02\/the-fourth-legislative-session-of-the-house-of-representatives\/","title":{"rendered":"The Fourth Legislative Session of the House of Representatives"},"content":{"rendered":"

<\/a> Welcome to Enterprise One: Legislation Watch<\/strong>, which calls on a tracker we maintain behind the scenes to keep tabs on dozens of pieces of regulation and legislation, from bills on the drawing board to long-awaited executive regulations. The goal: To give you a seven-minute overview of what you can expect out of the House this fall. Our tracker also follows pending regulatory changes and a bunch of other issues, all of which will be available only to our partners who join the Enterprise One program.<\/p>\n

This is the House of Reps\u2019 so-called \u201cfourth session\u201d <\/strong>\u2014 with the 2018-19 legislative calendar marking the fourth time the House has convened since its election.<\/p>\n

THE ECONOMY<\/strong><\/p>\n

Shoring-up the revenue base: <\/strong>The Finance Ministry has moved aggressively since the Madbouly Cabinet was formed to amend a number key laws that impact the tax code, real estate tax, customs and SMEs \u2014 key drivers of revenue for the treasury both current (the first three) and future (small businesses). Plenty of this is still in the drafting stage<\/strong>, suggesting we\u2019re looking at a busy year ahead for legislators. Other pieces, including the Banking Act and the Trade Ministry\u2019s automotive directive appear stalled (to outsiders), but could roar back to life at any moment.<\/p>\n

The easy stuff is done. <\/strong>Floating the EGP, passing an overhauled investment act, the new bankruptcy act \u2014 we\u2019re getting down to brass tacks this session as the government looks to build out a supporting framework for what the Sisi administration calls \u201cthe reform agenda.\u201d<\/p>\n

Among the highlights:<\/strong><\/p>\n

** Changes to the tax code:<\/strong> Amendments to the tax code will focus on procedures and the slashing of red tape \u2014 Finance Minister Mohamed Maait has given no sign that he is backing away the policy of tax-rate stability<\/strong> put in place by Amr El Garhy, the well-regarded finance minister under whom Maait served in the Ismail cabinet. The amendments aim to restructure the Tax Authority and make it fundamentally more customer-centric, Finance Minister Mohamed Maait had said<\/a>. He had also said that the new policies means to curb tax evasion and corruption through improved transparency and accountability. It will also regulate electronic tax payments, which went into effect this week for companies and which become the law for individuals in 2020.<\/p>\n

Taxing e-commerce:<\/strong> The ministry has also developed a tax framework for e-commerce, which it plans to introduce as part of the Income Tax Act, Assistant to the Finance Minister Mohamed Abdel Sattar confirmed in conversation with us earlier this week.<\/p>\n

Status: <\/strong>Changes to the tax code are on the fast-track for debate in the House in this legislative cycle. The bill was sent to President Abdel Fattah El Sisi earlier this month<\/a> for his signoff.<\/p>\n

** Real Estate Tax Act:<\/strong> The Madbouly Cabinet is looking to overhaul the tax code\u2019s provisions on the real estate tax<\/a> by devising new formulas that were initially meant to impact businesses and private properties. The ministries of oil and tourism recently signed agreements<\/a> with the Finance Ministry on the calculation of real estate taxes for their respective sectors as part of a broader overhaul of the real estate tax formula, which met with backlash<\/a> \u2014 prompting President Abdel Fattah El Sisi to step in<\/a> and order that no changes be made to the tax treatment of land on which factories and hotels currently stand. The Finance Ministry is, in parallel, stepping-up enforcement as it looks to collect real estate taxes owed by owners of properties used for billboards and mobile-phone towers.<\/p>\n

Competing legislation from the House: <\/strong>Unhappy with the proposed changes, some MPs have drafted rival legislation under a new name: The Returns Act<\/a>. The legislation would impose taxes on real estate based on size and location and would apply to commercial and residential properties alike. The annual tax would be added to electricity bills once a year; its backers estimate it would reel in around EGP 17 bn per annum<\/p>\n

Status: <\/strong>The amendments, which became publicly unpopular over the past couple of months, appear to still be in the drafting phase as the ministry looks to see how much it can push. We anticipate much jockeying between MPs and cabinet as they look to reconcile dueling bills. The one thing on which there appears (for now) to be consensus: Nobody is (yet) talking about taxing occupied, primary family dwellings<\/strong>.<\/p>\n

** Customs Act:<\/strong> The Finance Ministry is planning to introduce a new and more comprehensive Customs Act during the current legislative session. Sources had told us previously that the new legislation includes a host of measures<\/a> that would facilitate the flow of goods through Egypt\u2019s ports, including establishing a \u201cwhite list\u201d of importers<\/strong> who will benefit from expedited clearance of goods.<\/p>\n

Status:<\/strong> The law appears to be in its \u201cnational dialogue\u201d phase<\/a> (Egyptian press-speak for \u201cpublic consultations\u201d) with the House of Representatives having recently received input from business associations, including the Egyptian Businessmen\u2019s Association (EBA) and the Federation of Egyptian Industries.<\/p>\n

** The SMEs Act: <\/strong>As the keystone legislation in the state\u2019s drive to bring the informal economy into the fold, the SMEs Act sets out incentives for owners of micro-, small- and medium-sized enterprises to go legit\u2014 effectively services and (subsidized) access to finance in return for paying taxes. Assistant to the Finance Minister Mohamed Abdel Sattar told us yesterday that the law would impose a 1% flat income tax on all SMEs<\/strong> (with the ministry using the CBE\u2019s definition). There was even talk<\/a> of granting them VAT exemptions. The ministry is also hoping to block SMEs that do not register from receiving basic government services unless they register.<\/p>\n

Status:<\/strong> Last we heard, the ministry was conducting a final review<\/a> of the SMEs Act before sending it to the Madbouly Cabinet for review. The ministry hopes to introduce the act before the end of the year.<\/p>\n

** Insurance Act:<\/strong> The law would make the Financial Regulatory Authority (FRA) the primary regulator for the sector<\/a>, governing everything from the licensing of insurance companies, to setting best practices and industry standards, and regulating transactions, contracts, and policies. Compulsory insurance for SMEs<\/strong> is expected to be a key component of the new act, which is also expected to regulate insurance for freelance and seasonal jobs. It is also expected to make insurance cover mandatory for public gatherings and venues (such as malls and concerts).<\/p>\n

Status:<\/strong> The board of the FRA is supposed to be currently reviewing the final draft of the act, which will then be put up for \u201cnational dialogue\u201d in October and amended to reflect the views of various industry stakeholders. A final draft will then be presented<\/a> to the Madbouly Cabinet in December.<\/p>\n

ALSO IN THE PIPELINE<\/strong> and expected to be introduced in the House this session:<\/p>\n