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Telecom Egypt reaches an agreement with
the Tax Authority for resolving the capital gain tax dispute
Cairo 14 th October, 2004
In 1998, a committee was formed to value the net assets of the
Arab Republic of Egypt National Telecommunication Organization (ARENTO),
Telecom Egypt's (TE) predecessor, in preparation for the corporatization
process that resulted in issuing Law 19 for the year 1998 which establishes
TE with its new capital and asset base which increased in value by
EGP 11.4bn. The Tax Authority filed a claim requesting capital gain
taxes of EGP 4.8bn on the capital gain resulting from the valuation
of the company's net assets. After a series of negotiations, TE and
the tax authority agreed on the following (amongst other things):
- TE is not subject to the EGP 4.8bn capital gain tax
- Starting from 2004, TE's tax shield due to stock exchange listing
will be based on a paid-up capital base of EGP 17.112bn less the
increase resulting from the net asset valuation
- For tax purposes, depreciation expense will be based on the
fixed assets value prior to revaluation.
Akil Beshir, Chairman and CEO, stated "the agreement reached
between Telecom Egypt and the Tax Authority is a fair solution to
both parties; moreover, such agreement is expected to have a positive
impact on the Company's bond offering".
About Telecom Egypt
Telecom Egypt (TE), Egypt’s incumbent
telecommunications operator, was established in 1998 to replace the
former Arab Republic of Egypt National Telecommunication Organization
(ARENTO). The company has a fixed line subscriber base in excess
of 9 million subscribers which makes it the largest fixed line provider
in the Middle East and Africa.
Investor Relations Contacts
| Tarek Tantawy |
|
Hosam El Saadawy |
| Telephone: +202 5788826 |
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Telephone: +202 5764956 |
| Fax: +202 5789314 |
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Fax: +202 5789314 |
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| Eman Anis |
|
Alia Allouba |
| Telephone: +202 5788787 |
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Telephone: +202 5788787 |
| Fax: +202 5789314 |
|
Fax: +202 5789314 |
E-mail: investor.relations@telecomegypt.com.eg
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