Clarification regarding proposed tax law amendment

RNS Number : 4239J

Commercial Intnl Bank (Egypt) SAE

04 December 2018

 

RELEASE

Cairo, December 4^th, 2018

In response to the Egyptian Exchange's request to clarify the impact on the Bank's financial results on the back of the proposed amendments to income tax law with respect to the change in tax treatment of the sovereign portfolio.

In light of the current limited information availed to us, and the tax treatment formula proposed by the Ministry of Finance, as well as the agreement between the Federation of Egyptian Banks and the Ministry on applying said tax treatment to new sovereign issuances only, and not on a retroactive basis, CIB would like to note that the proposed tax amendment will not have an effect on 2018 financial results.

However, our 2019 projected profits reveal a decline of up to 5% depending on whether or not the loan loss provisions will be included within the tax treatment, which is yet to be finalized with the Ministry. It is worth noting that the Federation has stressed in its recommendations that loan loss provisions should not be included within the tax treatment as it is related to credit losses from banking operations only, and not related to the sovereign portfolio.

CIB would like to highlight that there is an open channel of communication between the Federation, the Ministry, and the Tax Authority in order to finalize the executive regulations of the proposed tax amendment.

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