The Egyptian President recently approved the bill for the new Customs Law No. 207 for the year 2020 (the ‘New Law’) to replace Customs Law No. 63 of 1966 (the ‘Old Law’). The New Law came in force as of 12 November 2020. The New Law introduced some provisions that should improve the customs system in Egypt, and encourage the national industries and investment.

However, the New Law includes many controversial articles addressing the activities of Maritime Carriers, Air Carrier and Inland Carriers, such as holding the Carrier liable for the description of goods transported, and prohibiting the Carrier from transporting goods imported by importers that are not registered in the customs dealers’ register. In addition, the New Law obliges the Carrier to re-ship the prohibited goods or destroy them at its own expense if the importer/cargo receiver failed to attend for the customs’ formalities.

Key highlights

Customs officials:

The New Law require that papers, records, files and documents related to customs operations are retained for a period of five years starting from the date of their release, otherwise a fine equivalent to the tax on the goods subject to scrutiny may be imposed. The New Law also allows customs officials to enter the premises of shipping agencies at any time (without the need to first obtain a judicial order to review papers, records, documents and files related to customs operations of the said agencies).

Inland transit goods:

The New Law resonates with the provisions of the Old Law in that respect. However, the New Law holds the carrier liable for any loss, shortage or alteration of the goods, or for the damage or tampering of the seals while transporting the goods in transit.

Temporary release:

The New Law permits goods to be temporarily released with suspension of the customs duties and other fees due, upon submission of certain guarantees specified by the law. As for the temporary release of machinery, equipment, devices, containers and means of transportation, (except for passenger cars and commercial yachts for work and leasing within the country), customs duty is collected at the rate of 2% of the customs duty due on the date of temporary release for each month or part of it, and with a maximum of 20% annually, all for the duration of its stay inside the country until it is re-exported abroad and its final release. However, the New Law didn’t specify or exclude the empty containers from the application of the said occasion.

Preclearance:

The New Law introduces entirely new procedures when it comes to the imports formalities, which in our opinion are the worthiest of attention in the New Law as it obligates the importer or his agent obligated to present the documents related to the goods to the authority before they are shipped to the country so that it can mark them with an initial customs registration number. The Registration Number of cargo should be passed to the carrier by the booking parties and the Carrier is obliged to include same into the Cargo Manifest & B/L other else, the cargo will not be discharged from the carrying vessel. For the time being, we believe that the aforementioned procedures may be quite difficult to implement in practice. Further, the necessary mechanisms and frameworks for their implementation have not been established regarding how the carrier will be able to validate the Registration Number provided by the merchant, and also its implicitly affect the application of the B/L issued “To Order”.

Manifests:

The New Law requires the carrier to mention in the manifest of their means of transport the types of goods registered with their real names, their quantities, the number of their parcels and their marks. It also requires that the carrier not ship any goods belonging to importers not registered with the Customs Administration of Egypt. Moreover, in the event that the data provided by the carrier proved to be incorrect (as in cases of prohibited cargoes) and the consignee did not attend to the customs clearance formalities, it will be the carrier’s responsibility to re-ship the prohibited goods outside the country or to destroy them as deemed suitable by the customs at the Carrier’s own expense. Bearing in mind that the prohibited cargo definition in the New Law is including the Goods that are rejected under regulations.

Additionally, the New Law brought forward the deadline that the carrier or its shipping agent must submit the Discharge Manifests, from 24 hours of the date of the ship’s arrival to 48 hours prior to ship’s arrival, and implicitly applies the same period for the Loading Manifests. Other else, the carrier will be subject to a fine amounting to EGP.30,000.– . However, upon the implementation of the New Law, this new provision created a lot of disturbance in the workflow as it didn’t take into account several considerations, such as short voyages for ships coming from nearby ports/countries (Haifa, Ashdod, Cyprus, Greece, Malta, Turkey, Jeddah) where the trip takes less than 48 hours in total. which lead the Head of Customs Administration to intervene in order to exempt Air Carriers, short leg voyages & Feeder Vessels and Haulage Transport from the manifest submission before 48 hours of arrival.

Sale of goods:

In relation to unclaimed goods whose owners have not released, returned, or transferred them to a free zone, free market, or economic zone of a special nature, Article 66 of the New Law reduces the period by which the customs officials are authorised to sell or dispose of them to a governmental agency from four months to One month.

Customs contraventions:

The New Law increases the fine imposed on ship captains for violations related to the manifest by EGP. 30,000 instead of EGP 500. Under the New Law, the carrier is now liable for discharging cargoes at yards other than those designated by the Customs Authority, whereas such operations are generally the basic role of the container terminals and subsequently any violation in this regard should fall within the terminal’ responsibility.

The fine imposed for simple violations such as causing damage to container seals and not following all customs procedures to be EGP. 10,000 instead of EGP200. Additionally, the fine imposed for the unjustifiable increases or decreases in the amount of the goods in comparison with the shipping documents has doubled, from quarter of the customs tax exposed to loss, to double the customs taxes exposed to loss in addition to the taxes and fees due. In our opinion, some of the fines of the New Law were excessively increased. The increment is disproportionate in some cases and does not take into account that some of these offences are fairly common and could occur by mistake. In practice, such incidents are not within the control of the would-be offenders.

Smuggling

The New Law defines smuggling as any act committed with the purpose of fully or partially escaping the customs tax due or in violation of the regulations in force regarding prohibited goods and gave 13 example on the events that considered smuggling under the said law.

The New Law sets out a new procedure where the Public Prosecution or the competent court, upon a ministerial or customs’ request, may order all entities and persons accused of smuggling cases to cease all commercial activities and dealing with the Customs’ Administration until a final judgment is rendered by the Court (‘Stop Order’), which may have grave consequences when applied to shipping agencies and such a procedure may be used as a tool to strong arm people/parties accused of smuggling with the aim of urging them to reconcile in order to avoid any delays or interruption to their business, despite their innocence ( as no Liner can tolerate such an order for more than a couple of days)

The revisiting of the New Law was a must to reflect both technological developments and the state’s approach to make Egypt investment-friendly. However, some of the New Law’s articles which are dealing with the Carriers and their shipping agents role could put obstacles on their activities. Therefore, we hope that the Executive Regulatory will be clearer in defining the Carriers’ role and liabilities and comply with the international conventions ratified by Egypt as long the Egyptian Maritime Law.

Al Tamimi & Company commentary on the New Law with respect to the Maritime Carriers has been acknowledged by all the Chambers of Shipping operating in Egypt as well as the Egyptian Businessmen Association and we are taking a closer look and offering its professional legal and practical expertise for any individual or entity wishing to further understand the Customs Law, how to benefit from it, and any risks caused to the benefactors of the New Customs Law (the “New Law”). And have attended several meetings with Competent Authorities to provide the legal advice required based in our wide experience in Customs disputes.