Last Update 0:25
Wednesday, 13 November 2019

Egypt imposes 10% capital gain tax, stocks turn red

Investors spooked by newly-approved tax on profits reaped from Egypt's stock market, which analysts say is being pushed at the wrong time

Ahram Online, Thursday 29 May 2014
Hany kadry
Finance Minister Hany Kadry Demian (Photo: Al-Ahram)
Views: 2293
Views: 2293

Egypt’s stocks tumbled on Thursday on a decision taken by the current interim government to impose a controversial capital gain tax (CGT) on profits made by investors in the Egyptian bourse.

Finance Minister Hany Kadry Demian revealed to Reuters on Thursday that the Egyptians cabinet has approved levying a 10 percent CGT on profits and dividends of the listed securities in an attempt to shower the public treasury with LE10 billion ($1.4 billion) per annum.

The market benchmark EGX30 significantly slumped 3.4 percent to record 8,242 points, as investors (particularly foreigners) have been less than enthusiastic over the decision.

The broader index EGX70 also slipped 2.6 percent in a session that saw a daily turnover of listed securities worth LE1.3 billion.

Eissa Fathy, deputy head of the securities division at the Cairo Chamber of Commerce, told Ahram Online that the government has made a big mistake, especially in picking the time of the decision, as many people will link the stocks' plunge with the preliminary victory of former army chief Abdel-Fattah El-Sisi on Thursday.

"Also, there are legal issues related to the CGT decision that should be highlighted," Fathy added.

On the other hand, Demian said that the 0.001 transactions tax – imposed in 2013 under the tenure of then-president Mohamed Morsi – is expected to be cancelled next week.

Mostly of the market’s listed stocks turned red on Thursday due to the new tax, with bellwether Commercial International Bank (CIB) leading the pack in a 4.4 percent loss to close at LE35.5 per share.

Real estate developers all declined, with Talaat Moustafa Group (TMG), Palm Hills Development (PHD) and Six of October Development and Investment (SODIC) falling 4.8 percent, 3.1 percent and 4 percent to register LE8.8, LE4.3 and LE25.8 per share respectively.

Domestic investors were net-buyers with some LE12.9 million. However, foreign investors (representing 16.2 percent of the market) ended the week as net-sellers with some LE32.1 million. 

Short link:


Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.

01-06-2014 08:15am
It's normal
There are few countries in the world that do not levy capital gains tax on stock market transactions, or income tax on dividends. And 10% is modest by world standards. In Egypt's current economic and fiscal crisis, this is a means of raising revenue that will not hit the population at large, especially the poor. And in no time at all the stock exchange will have factored in the fact that profits and income are taxable - and it will be business as usual.
Comment's Title

© 2010 Ahram Online.