Egypt's OCI reiterates denials of govt charges of tax evasion

Egypt's OCI reiterates denials of govt charges of tax evasion

Egypt's largest listed company, Orascom Construction Industries (OCI), expressed confidence on Monday about its tax position, reiterating denials that it had evaded government taxes on the sale of one of its subsidiaries to French cement giant Lafarge in 2007 Al Ahramonline reported.

On Sunday, Egypt's prosecutor-general barred OCI's current chairman and CEO, Nassef Sawiris, along with former company chairman Onsi Sawiris, from leaving the county. The move followed charges that OCI had failed to pay taxes worth some LE14 billion (roughly $2 billion) on its sale to Lafarge.

In 2007, OCI sold its Orascom Building Materials Holding (OBMH) to the French firm in a transaction worth $12 billion.

In its Monday statement, OCI asserted that the ETA had sent the company a request to pay LE4.7 billion (roughly $0.7 billion) related to the aforementioned sale, but had not received any additional requests.

The government and OCI are now trading accusations over the 2007 transaction, with the latter charging the government with attempting to tax it illegally.

On Monday, official state news agency MENA reported that the Egyptian Tax Authority (ETA) had "exhausted all means of negotiating with OCI" over the dispute.

The Egyptian government's claims of tax evasion, meanwhile, do not appear to be legally substantiated, according to analysts who spoke to Ahram Online.

"OCI did not evade taxes; it simply sidestepped them by listing OBMH - technically an OCI subsidiary - on the Egyptian Stock Exchange in 2007, all the shares of which it sold to Lafarge," said one analyst familiar with the matter who requested anonymity.

"The transaction was untaxed, since Egypt did not tax deals made on the stock exchange," he added. "Had OCI sold the company without listing it first, it would have been subject to taxes."

In November of last year, Egyptian Prime Minister Hisham Qandil approved implementation of a new capital gains tax to be imposed on all initial public offerings (IPOs) subsequently made on the Egyptian stock market.

Strapped for cash - and following recent hints by President Mohamed Morsi that companies who have evaded taxes in the past would be held to account - the government is now retroactively demanding taxes from OCI's deal with Lafarge.

OCI initially offered to settle the dispute by paying LE2 billion, but the government rejected the offer.

Analysts, meanwhile, fear the dispute will take a toll on Egypt's investment environment.

"I think the government made a huge mistake by issuing the travel ban on the OCI officials, as this is likely to spook investors in Egypt," said Hassan Hegazi, head of the tax and customs committee at the American Chamber of Commerce in Egypt.

Hegazi went on to point out that some Egyptian investors were already seeking to leave the country to avoid similar financial confrontations with the government, "especially since OCI is being targeted when it didn't do anything illegal."

"The government, which should be encouraging investment, shouldn't make trouble that might have the effect of driving investors away from the Egyptian market," Hegazi told Ahram Online.

OCI shares ended trading on Monday down by 2.7 percent, as a result of the company's dispute with the government, to alight at LE252 each.

In January, OCI ended its Global Depository Receipts (GDRs) programme on the London Stock Exchange after the company relocated from Cairo to Amsterdam under the auspices of OCI NV.

In a related development, a group of US investors led by Bill Gates announced plans in January to acquire a $1 billion stake in OCI NV.

Baku Higher Oil School honors memory of victims of Khojaly genocide (PHOTO)
Baku Higher Oil School honors memory of victims of Khojaly genocide (PHOTO)
Mine explosion kills one in Azerbaijan’s Sugovushan
Mine explosion kills one in Azerbaijan’s Sugovushan
Myanmar police issue arrest warrants for celebrities for endorsing strike movement
Myanmar police issue arrest warrants for celebrities for endorsing strike movement
Loading Bars
Iranian minister talks about obstacles related to Iran-Turkmenistan railway lines
Iran dismisses idea of talks with EU and U.S. to revive 2015 nuclear deal
Russia launches its first Arctic-monitoring satellite
European Council President arrives in Tbilisi
Sugar prices in Kyrgyzstan increase by 46% over year
Turkey reports over 8,000 new daily COVID-19 cases, 66 fatalities
Iran’s non-oil trade exceeds $65 billion in 11 months
Moscow hosts trilateral meeting on Karabakh
Africa's confirmed COVID-19 cases near 3.89 mln: Africa CDC
Israel launches 29-mln-USD support plan for SMEs amid COVID-19 crisis
Turkish firm to develop hybrid rocket tech for 2023 moon mission
Iran’s Isfahan Province possesses great potential for construction of greenhouses
UK records another 6,035 coronavirus cases, 144 deaths
Weekly review of main events in Azerbaijan's transport sector
Germany to invest €8 mln in economic development of Aral Sea region
0.03% of pupils and 0.1% of school staff confirmed with Covid-19 this week in Georgia
At least 18 killed in Myanmar on bloodiest day of protests against coup
Iran's Energy Exchange announces products to be on sale on March 1
Aramco seeks one-year extension on $10 billion loan
Bitcoin extends retreat from record high to hit lowest in 20 days
COVID-19: Kazakh capital returns to ‘red zone’
Azerbaijan shares footage of Chiraguz village of Khojavand district (PHOTO/VIDEO)
French company to generate electricity from waste in Iran's Tabriz
Azerbaijan discloses number of citizens vaccinated against COVID-19
Azerbaijan able to firmly prevent any possible threats - Foreign Ministry
Bloody events in Sumgayit city - planned provocation against Azerbaijan - Foreign Ministry (UPDATE)
Death toll from coronavirus pandemic in Iran exceeds 60,000
Georgian journalists and experts visit Fuzuli district of Azerbaijan (PHOTO)
Bahar Azadi gold coin price continues to fall in Iran
Georgia's export of vegetables down year-on-year
Russia and Azerbaijan are friendly countries - President Aliyev
Russian-Turkish Monitoring Center will function as very important instrument for post-war period - President Aliyev
Armenian soldiers fled leaving two lonely elderly Armenian people behind - President Aliyev
We have no problems with Armenian people - President of Azerbaijan
“Smart village” project will be implemented in three villages of Zangilan district - President Aliyev
When Khojaly genocide was committed, world was silent - President of Azerbaijan
Turkey to open tender for Canal Istanbul in 2021
Armenian side did not provide us with maps of minefields, this can be considered crime - President of Azerbaijan
I can't understand why poster 'Welcome to Azerbaijan!' irritates Armenia in any way - President Aliyev
There cannot be prisoner of war 20 days after war, these are terrorists and saboteurs - President Aliyev
Armenia must fully implement the statement of 10 November - President of Azerbaijan
Some countries purchased three to four times more vaccines than they need - President of Azerbaijan
Azerbaijan - first country in South Caucasus to start vaccination, says President Aliyev
We have avenged victims of Khojaly on battlefield - President of Azerbaijan
Whole world sees and knows that Azerbaijani people were subjected to genocide at end of 20th century - President Aliyev
Russia’s COVID-19 case tally rises by 11,359
Azerbaijan reports 117 more COVID-19 recoveries
European Council President to visit Georgia today
Soyuz-2.1b carrier rocket with Arktika-M satellite blasts off from Baikonur spaceport
Certain villages in Iran to be supplied with gas
Bloody events in Sumgayit city - planned provocation against Azerbaijan - Foreign Ministry
Azerbaijan shares Eyvazkhanbeyli village of Aghdam district (PHOTO/VIDEO)
Iran's Tehran Oil Refining Company signs contract to increase refining
China's factory activity expands at a slower pace in February, misses expectations
Turkey set to support Croatia's post-quake revival: Turkish FM
COVID-19 Update: 83,179 Kyrgyzstanis recovered
Georgia reports 248 coronavirus cases, 525 recoveries, 11 deaths
Iran's Gorgan-Mashhad railway to be built
Trade relations between Azerbaijan and Russian Ulyanovsk region expanding
Weekly review of Azerbaijani ICT sector highlights
UK's Sunak will set out plans to raise income tax by 6 billion sterling
Australia receives AstraZeneca vials as it ramps up vaccination drive
January 2021 value of mortgage loans in Azerbaijan grows in absolute terms
Kazakhstan adds 791 new COVID-19 cases
5.5-magnitude quake hits 81 km SW of Islay (Matarani), Peru
Iranian Minister unveils ports' infrastructure dev't plans
Turkey confirms 9,193 new COVID-19 cases, 2,693,164 in total
S&P Global affirms Georgia’s sovereign credit rating at ‘BB’
Razi COVID-19 vaccine to begin clinical trial: Minister
5 died after accident in northeast China chemical fiber plant
US regulator approves Johnson&Johnson coronavirus vaccine
Kazakhstan twofold decreases exports to Norway amid COVID-19
Iraq reports 3,543 new COVID-19 cases, 692,241 in total
5.3-magnitude quake hits 3 km SW of Point MacKenzie, Alaska
Qatar reports 460 new COVID-19 cases, 163,197 in total
Weekly review of highlights in Azerbaijani financial market
UK records another 7,434 coronavirus cases, 290 deaths
It is necessary to end deployment of Armenian armed forces on territory of Azerbaijan - Foreign Ministry
WHO reports over 420,000 new daily cases of COVID-19
Istanbul’s major Galataport project to go live in April
Iran's Energy Exchange announces products to be on sale on February 28
Uzbekistan's largest share in formation of GDP falls on Tashkent
Azerbaijan's revenues from tea, coffee exports double in Jan.2021
Cargo movements in Iran's Khalij-e-Fars port increase
China conditionally approves one-shot recombinant COVID-19 vaccine
Stock gains power Buffett's Berkshire Hathaway to higher profit
More than 165,000 apply for Turkey’s most popular scholarship
Georgian Railway resumes passenger transfers
Kazakhstan reports value increase in all types of deposits
New road put into operation in Iran's Golestan Province
Azerbaijan sets up working subgroups to prepare 2021-2025 Development Strategy
Bahar Azadi gold coin price falling in Iran
Azerbaijan reports 172 more COVID-19 recoveries
Azerbaijan's Ministry of Finance to put up medium-term bonds for auction
Azerbaijan's banking sector ends January 2021 with profit
Foundation of several manufacturing enterprises laid in Iran's Qazvin Province
Uzbek-Korean JV to buy spare parts for metal detector via tender
USAID to promote start-up dev’t in Turkmenistan
President Aliyev: Any attempt to violate implementation of November 10th declaration will be very harmful for Armenia (VIDEO)
Iran reveals COVID-19 data for February 27
All news