30% Tax Break for Late Tax Filers
Egypt issued Tax Disputes Law No. 16/2020 allowing late tax filers who have reached an agreement to the Tax Authority to be exempted from the payment of 30% of the applicable late fees.
Virtual BOD Meetings, EGMs and OGMs
To reduce the spread of the coronavirus, the General Authority for Investment and Free Zones (GAFI) issued Decision No. 160/2020 on March 19th permitting all BOD meetings, Extraordinary General Meetings (OGMs) and Ordinary General Meetings (OGMs) to be held virtually through conference call or video call. This decision applies to companies established in accordance with Companies Law No. 159/1981 and Investment Law No. 72/2017 and will be in force until further notice.
Postponement of Court Hearings
On March 15th, the Ministry of Justice suspended all court hearings through March 31st. Hearings previously scheduled for this period will be postponed until a later date. The courts will still be open for administrative procedures.
Suspension of Most Commercial Registry Services
As of March 17th, GAFI announced that almost all Commercial Registry services would be suspended through March 31st. Only CR retrieval services will be available, between the hours of 9 AM to 12:30 PM.
Is Coronavirus Considered Force Majeure?
A force majeure situation is an unforeseeable event for which neither party to a contract is responsible, that frustrates the performance of a contract and renders it impossible. Force majeure clauses may be broad, or they may require that the force majeure scenario last for a specific period before either party is allowed to terminate the contract. The World Health Organization has declared this year’s coronavirus to be a pandemic. Pandemics are force majeure events, unless a contract explicitly states the opposite.
The Egyptian government has ordered the closure of all hotels in Hurghada and Sharm el Sheikh, as well as some hotels in Alexandria. On March 19th, the Prime Minister announced that all malls, stores, restaurants, and cafes were to be closed from 7 PM until 6 AM. Many hotels and travel agencies, along with businesses operating in complementary industries will incur substantial financial losses that may make it difficult to meet certain contractual obligations on time. Hotels that have been forced to close may activate the force majeure clause in the hotel booking contract between the hotel and the guests who have had their stay disrupted.
As per the Egyptian Civil Law, if a natural or legal person is able to prove that damages were the result of force majeure, there is no obligation to compensate the affected party for such damages. Business owners should keep daily, detailed logs of cancelled bookings and extra expenses incurred for as long as the force majeure situation continues.
With regard to employment agreements, if the employer is forced to terminate the employee for economic reasons, the employer must pay severance equivalent to: one month’s salary for each of the first five years of employment, plus 1.5 months’ salary for each additional year of employment. Under Article 76 of Labor Law No. 12/2003, employers may use force majeure as a rationale for instructing employees to temporarily perform tasks that were not originally included in the employment agreement, to the extent that the change in duties does not violate the employee’s rights and those duties are not fundamentally different from the employee’s original responsibilities.
Companies Employing Foreign Workers
Egypt has suspended incoming and outgoing air travel for the period from March 19th until March 31st. Some embassies, including the French and German embassies, are coordinating efforts to repatriate their nationals. If you employ foreign workers who have chosen to return home at this time, you have the following options upon their return to Cairo:
- To subtract the days spent abroad from the employee’s paid annual leave,
- To subtract the days spent abroad from the employee’s sick leave, or
- To allow the employee to resign and terminate the employment agreement.
An employee’s 20 consecutive days of absence after receiving two warnings (the first after 5 days of absence, the second after 10) is classified as a gross violation under the Labor Law. Whether you decide to arbitrarily terminate the employee’s contract or terminate it due to the employee’s commission of a gross violation, you must comply with all applicable provisions in the Labor Law. Consult with a lawyer before terminating any employee.