Egypt's stocks rally on news of milder tax law
Ahram Online, Monday 2 Jun 2014
Main index rebounds 1.53 percent as exemptions widened and tax rate reduced for some shareholders, who were spooked after approval of capital gains tax (CGT)


Egypt's stocks rallied on Monday after a cabinet decision to amend a recently-introduced controversial capital gains tax (CGT) law, with the main EGX30 index rising 1.53 percent to reach 8,015 points.

The 10 percent tax imposed last week triggered a sharp fall in the main index, which hit a four week-low on Sunday, closing at 7,894 points.

The tax on profits and dividends of the listed securities aimed to reap LE10 billion ($1.4 billion) a year for the public treasury, Finance Minister Hany Kadry Demian explained to Reuters on Thursday.

But the market's reaction led the cabinet of Prime Minister Ibrahim Mahleb to amend the CGT on Sunday, exempting share dividends and cash dividends up to LE15,000 from paying the new tax,Al-Ahram's Arabic news website reported.

The tax rate will also be reduced to 5 percent on cash dividends for shareholders who own 25 percent or more of the listed companies' capital.

The cabinet also decided to cancel the 0.001 transaction tax that was imposed on stock exchange investors in 2013.

The majority of EGX30's shares were in the green on Monday, as Egyptian investors acted as net-sellers for the session to the tune of LE37.8 million and non-Arab foreigners were the main net-buyers for LE31 million.

The most traded share was Orascom Telecom Media and Technology Holding (OTMT), with a turnover value of LE99 million, rising 3.39 percent to trade at LE1.22 a share.

Market bellwether Commercial International Bank (CIB) rose 2.51 percent to close at LE35.98.

Real estate shares also made gains, as Six of October Development and Investment (SODIC) rose 2.24 percent to LE26.43, Palm Hills Development Company rose 1.72 percent to LE4.14 and TMG Holding rose 1.04 percent to LE8.75.

In the telecom sector, fixed-line operator Telecom Egypt (TE) rose 1.69 percent to LE13.27 and Global Telecom Holding rose 0.99 percent to LE5.12.

The broader EGX70 index was up 0.5 percent.



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