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Egypt to start implementing capital gains tax on Sunday

Reuters, Thursday 3 Jul 2014
Views: 1562
Views: 1562

Egypt will start implementing a new capital gains tax on Sunday after the law was printed in the official gazette on Thursday, as the country seeks to increase sources of revenue following more than three years of economic and political turmoil.

The managing director of Misr For Clearing, Settlement and Central Depository (MCDR) told Reuters on Thursday that his organisation would start implementing the tax on Sunday.

"It is for sure now that the transactions on the Egyptian bourse on Sunday will be subject to the tax. These transactions will be settled financially on Tuesday morning," Tareq Abdel Bary told Reuters over the phone.

Egypt's President Abdel Fattah al-Sisi passed the law on Tuesday, imposing a 10 percent tax on capital gains and stock dividends as the cash-stripped country of 85 million seeks to boost revenue to help its ailing economy.

"We will deduct 6 percent of the realised profit from foreign investors with each transaction under the tax account but for the Egyptian investors we will record the realised profits and send them to the tax authority which will collect," Bary added.

The finance ministry had initially set an annual tax-free limit of LE10,000 ($1,400) on cash dividend payments for individual residents in Egypt but the tax was watered down last month after news of it caused the stock market to record its biggest daily drop in almost a year.

Financial Supervisory Authority head Sherif Samy told Reuters last month that the tax threshold would be raised to LE15,000.

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