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| Legal Affairs Committee
Hassan Hegazy, chairman of the Customs & Taxation Committee, and Nabil Hilmy, chairman of the Legal Affairs Committee, chaired a meeting on October 31 with guest speaker Talaat Hammam, chairman of the Tax Authority, to talk about the new draft tax law to be submitted to parliament this term. Hammam emphasized the importance of equality and fairness with the public in the process of tax collection. Resources should be available for the economy’s development while keeping people satisfied, he said. Moderator Ahmed Shawki, managing partner at Mostafa Shawki & Co., emphasized the importance of presenting a fair and balanced tax law that would result in an increase in national and foreign investments. Several AmCham members raised questions about tax benefits for export-promotion activities and criticized the penalties associated with the new law. Another suggestion was to lower taxes, on the grounds that cuts resulting in a decrease in the Tax Authority’s intake by LE 3.2 billion would be balanced by an increase in the number of people paying their full taxes. The current system of tax benefits for new companies is inadequate since new firms often do not start seeing profits for five or six years. Tax cuts would therefore be more effective. New issues raised in the meeting included the tax on capital goods and the calculation of depreciation on computers and IT machinery. Rights and duties of maritime agents The Legal Affairs and Shipping & Maritime committees met in Alexandria on October 14 to discuss "rights and duties of maritime agents." The speakers were Abdel Rafea Moussa, professor of commercial and business law, Zagazig University, and Tarek Fahmy, chairman and managing director of Mediterranean Shipping Company (MSC) in Egypt. More than 60 attended the meeting. Moussa focused on maritime agents who used to work in the public sector but now work in the private sector. These agents often encounter problems in dealing with the Customs Authority. There is confusion between agents, shippers, captains and the Customs Authority over who is responsible for cargo when it is in port. Moussa advised that Law 163, which deals with these relationships, should be modified to address this confusion. Fahmy then explained the rights and duties of shipping agents in practical terms. He said that the implementation of Law 1 of 1998 has created problems, especially with the authorities asking agents for financial guarantees on cargo. As for the future of shipping, Fahmy explained that globalization would bring about the end of most small and medium-size shippers. He also predicted that the Internet would have a huge impact on how shipping information is retrieved and reservations made. At the conclusion of the meeting, guests agreed that forming an agents’ consortium to defend themselves against the customs and sales tax authority was the best solution to all problems. Challenges facing BOOT projects Hani Sarie El Din, partner at Shalakany Law Office and lecturer at Cairo University, spoke at a joint meeting of the Construction & Development and Legal Affairs committees on June 11 about "The Egyptian experience: Challenges of BOOT projects from a contractual/legal standpoint." BOOT (Build, Own, Operate, Transfer) projects are based on the granting of a concession by a principal (normally a government) to a promoter responsible for the construction, financing, operation and maintenance of a facility over the period of the concession. In the end, the promoter transfers the facility at no cost to the principal. It sounds easy, but many problems can arise in this process. Private investment flows to BOT/BOOT/concession projects are usually disproportionate to the needs of the state for infrastructure services. Also, the negotiation process can sometimes be too lengthy and lead to low quality in tendering documents. Lastly, there is often a lack of coordination between promoters and the government, allowing a range of legal issues to arise during the process. According to Sarie El Din, it is of utmost importance for Egypt to have more clarity in the rules and more transparency throughout the process. The proposed solutions are to train government representatives, establish regulatory bodies and remove all undue restrictions. Intellectual property rights: New developments in Egyptian law The Legal Affairs Committee met on May 30 at the AmCham building to discuss "Intellectual property rights: New developments in Egyptian law," and to consider the question "Is Egypt in compliance with TRIPS (Trade-Related Intellectual Property Rights)?" The guest speaker was Dr. Mohamed Hossam Loutfi, professor of civil law at Cairo University, Beni Suef Law School, and expert with the World Intellectual Property Organization. Loutfi summarized the history of the GATT, starting in 1947. The issue of intellectual property rights (IPR) was first covered in the Tokyo agreement in 1976. A WTO meeting in 1999 implemented 28 trade agreements divided into three groups: GATT 94, GATTS and TRIPS. The speaker explained the pipeline concept and discussed sections of the IPR law dealing with pharmaceuticals, undisclosed information, plant varieties, internationally recognized trademarks, industrial designs and drawings. He also reviewed the process through which the IPR draft law would have to pass, starting with discussion in the People’s Assembly and also including a presentation in Geneva to verify compliance with WTO standards. The question and answer session focused on changes that will occur if the draft becomes law, the likely impact on multinational companies and the need for legal advice to protect companies once the law is passed. Loutfi promised that the local market – driven by new inventions and discoveries – would prosper once the law was fully implemented. A discussion entitled "Real-estate financing law: Legal aspects and market implications" was led by Counselor Adel Abdel Baki, chairman of the National Real Estate Investment Company, on January 17 at the AmCham building. Formerly the chairman of the Egyptian Real Estate Bank, Abdel Baki focused on the reasons behind the issuing of the law, which for years has been a hotly contested issue in the Egyptian government and banking and real-estate sectors. He said that for several reasons the law is essential for ending the long-term slump in the real-estate market. Among these are the oversupply of deluxe and medium-sized units in new cities like 6th of October and bad real-estate investment distribution on the part of the upper classes. In order to deal with some of these issues, new methods of financing need to be developed and implemented by banks, insurance companies and real-estate financing companies. Committee members argued that these strategies will solve no more than 20 percent of the problem and said that long-term solutions lay in lowering original housing costs along with cutting interest rates. Members also said that other issues – such as there only being one real-estate bank in the country as well as the need for interest rates suitable for different class levels – also need to be tackled. |
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