Non-Cash Payments Law No.18 of 2019 (Legal Alert 156) – Finance and Banking

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Egypt: Non-Cash Payments Act No.18 of 2019 (Legal Alert 156)

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April 16e 2019, the Egyptian government passed a law to regulate non-cash payment methods. The law entered into force the day after its promulgation, and according to article 2, the addressees of the law benefited from a period of six months to regularize their status, calculated from the date of entry into force of the regulation of execution of the law.

The executive regulation of the law was issued in accordance with Prime Minister’s Decree no. 1776 of 2020 and was published in the Official Journal on September 7e 2020, to enter into force the day after its publication date.

Subsequently, the Council of Ministers decided to extend the reconciliation period by a further 6 months, expiring on September 7, 2021. Therefore, the law will now enter into force on September 8, 2021.

In addition, the Financial Regulatory Authority simultaneously published a book with the conditions for the application of the law, while clarifying the obligations resulting from its publication, and obliging companies and entities subject to the authority to accelerate the implementation. implemented.

Definitions according to the new law:

  1. Non-cash payment method: any payment method that results in an addition to a beneficiary’s bank account, such as deposits, transfers, debit, credit cards and payments by mobile or other means approved by the Central Bank of Egypt.
  1. Bank Account: A contract between a natural or legal person and a bank registered with the Central Bank or one of the entities authorized to exercise deposit or credit activity in Egypt to open an account at the bank which allows all transactions. such as deposits, withdrawals and mutual debt settlement in cash or electronically.
  1. Cash funding: Funding provided by banks, mortgage companies, leasing companies, microfinance / microenterprise companies or associations or any other person authorized to work in these areas

The following has been addressed by this law:

1. All state authorities and agencies

2. Public legal entities

3. Companies in which the State holds all or the majority of its capital

4. Private legal entities and establishments of all kinds

Obligations covered by law

  1. All public authorities, legal entities governed by public law and companies in which the State holds all or the majority of the capital, are required to pay their financial contributions to their boards of directors, committees, employees, experts and social contributions by means not monetary.
  1. Private legal entities and establishments of all kinds are required to pay the contributions of their employees, experts, chairmen and members of the boards of directors and social contributions by non-monetary means, when their number of employees exceeds 25 or the value of their monthly salary exceeds 100,000 EGP.
  1. All state authorities, legal entities and establishments of all types are required to make the following payments by non-cash methods whenever they exceed the limits below:
    Maximum cash payment Payments
    EGP 1 All sums due to suppliers, contractors, service providers and other contractors paid by State authorities or bodies or legal persons and companies governed by public law in which the State holds all or the majority of its capital
    EGP 5000 All amounts due to suppliers, contractors, service providers and other contractors paid by private legal persons and establishments of all types
    EGP 2000 Cash payment
    EGP 2000 Distribution of profits resulting from the contribution to the capital of companies or investment funds
    500 EGP Amounts owed by union members
    EGP 5000 Members of private insurance funds and compensation of insured persons
    500 EGP The payment of grants and donations through charities and national institutions
    EGP 10,000 Amounts due following the purchase or mortgage of land or vehicles
    5000 EGP / month Amounts due for the rental, operation, land use or mortgage of express transport vehicles

Penalties

The regulations impose the following penalties:

  1. Penalty of at least 2% and at most 10% of the total amount of cash payments, with a ceiling of EGP 1 million. The same penalty applies to those who pay partially to circumvent the limits of this law.
  1. Penalty of at least 100,000 EGP and no more than 300,000 EGP to those who charge an additional amount for the use of non-cash payment methods
  1. These penalties will be duplicated in the event of a repeat offense.

Criminal liability

Without prejudice to the criminal liability of natural persons, the persons responsible for the management of the legal person are liable to the same penalty if their knowledge is proven, and this failure to fulfill their duties contributed to the offense committed.

Purpose of the law

This legislation is an unprecedented legislative change to encourage and regulate the inevitable transition to the digital economy, provide a secure environment for investment and reduce financial crime and tax evasion.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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