Clients Alert – H.E. President Abdel Fattah El Sisi Ratified The Symbiotic Contribution Law
On August 13th, 2020, H.E. President Abdel Fattah El Sisi ratified the Law on the Symbiotic contribution to face the repercussions of epidemics and natural disasters No. 170 of 2020 (the “Law”), which entered into force as of August 14th, 2020.
According to the provisions of the Law, 1% of the monthly net revenue of all employees, whether they earned such revenue from working with the employer directly or they earned it by working with such employers under any other scope. In addition, 0.5% of the net pensions of retirees provided for by the social insurance law shall be deducted, as a contribution to face the repercussions of epidemics and natural disasters, and that is for an initial term of 12 months. This initial term may be shortened or extended by a resolution from the cabinet; however, the total term of the deduction shall not exceed 12 months unless otherwise approved by the Parliament.
According to Article (2) of the Law, the scope of the law includes the employees of the governmental authorities such as ministries, governmental authorities, local administration, general authorities, the public sector, the business public sector, banks, private sector, employees regulated by specific laws or regulations, public offices, chairman and board members of the authorities and bodies mentioned above. The deduction is applicable regardless of the nature of the employment, permanent or temporary, and regardless of the title of the employee. It applies also to experts and/or consultants or employees in any other position or capacity.
The Law, exclusively, exempts the following:
1. Employees whom the monthly net revenue do not exceed EGP2000;
2. Retirees whom the monthly net pensions do not exceed EGP2000;
3. The employees of the affected economic sectors may be exempt totally or partially by virtue of the resolution of the cabinet.
The deduction is made and collected by the competent authority in charge of paying the salary or the pensions and transferred in total to the Ministry of Finance bank account at the Egyptian central bank.
The collected amounts shall be allocated to:
1. The subsidization of the affected productive and economic sectors, as well as the affected companies and projects;
2. The subsidization of the employees of the affected productive and economic sectors, as well as the employees of the affected companies and projects;
3. The payment of financial and in-kind aid to individuals and families by virtue of presidential decree;
4. The contribution in healthcare research and the development of the healthcare system;
5. Any other purposes to be resolved upon by virtue of a decree from the cabinet.
A decree by the Prime Minister is to be issued in application to the Law (the “Executive Regulations”).
It is worth noting that the Law does not include the start date of the deduction. However, it is being reported by the news that it shall be as of July 2020. The Prime minister decree to be issued in application to Article 6 of the Law might provide the effective date of deduction explicitly.
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