The Ministry of Finance and the Financial Regulatory Authority (FRA) are examining a package of incentives aimed at encouraging companies to list on the stock exchange. Under the proposals, newly listed companies on the exchange may be granted a three-year tax exemption on income generated from initial public offerings (IPOs).
The new incentives, part of the second package of tax reforms that was recently unveiled, are expected to be issued in the form of legislation during the first half of 2026 following the completion of the required regulatory approvals.
In a press statement issued on 15 December, Rasha Abdel-Aal, head of the Egyptian Tax Authority, said that a measure to grant three-year tax incentives to newly listed companies is intended to encourage the listing of large and influential firms, in coordination with the FRA.
She noted that the planned incentives would be linked to some indicators, including trading volumes, investment spending, and expansion plans. The possibility of extending the incentives for an additional three years is also under consideration, subject to expected growth rates and expansion plans.
Ahmed Heidar, chief executive officer of Al-Ahly Pharos Investment Banking, said that policymakers have reviewed experiences in markets comparable to Egypt’s, such as India, and South Africa, to find out more about incentives offered in these countries to stimulate capital markets, particularly those designed to attract sectors that are underrepresented in the Egyptian market, including retail, tourism companies, and financial technology firms (fintech).
He said that the proposed incentives also take into account companies seeking to expand their presence in the capital market by making more of their shares available to the public as well as those aiming to raise capital through the stock exchange.
According to press reports, the incentives will be tied to tangible outcomes in terms of trading volumes, investment expenditure, and expansion strategies.
Finance Minister Ahmed Kouchouk earlier said that the government is moving towards replacing the capital gains tax with a stamp duty tax to encourage institutional investment in the exchange.
Mohamed Maher, chairman of the Egyptian Securities Association, said that a stamp duty would be easier to administer for both the Ministry of Finance and market participants, whether individuals or institutions, given its greater clarity and the ease with which the ministry could estimate and monitor its proceeds on a daily basis.
He added that this type of tax also enables investors to calculate trading costs more accurately and, in turn, determine their profit margins.
Eissa Fathi, managing director of Cairo for Securities Trading, argued that the stamp duty, set at LE1.5 per LE1,000, would not generate the substantial tax revenues initially anticipated and instead would contribute to weakening trading values. Fathi called for the rate not to exceed LE0.5 per LE1,000, stressing that any increase beyond this level would not be conducive to encouraging investors.
Maher added that among the amendments the market hopes to see implemented is the exemption of part of the capital of newly listed companies from taxation. He noted that if money invested in the stock market was deposited in the banks instead, it would generate a return; accordingly, the value of these unrealised returns should be deducted from the tax base.
He also pointed to the need for a legislative amendment to set a minimum threshold for debts that can be written off without undergoing lengthy legal procedures.
Fathi concurred, saying that the Securities Division of the Cairo Chamber of Commerce has called for exempting a percentage of working capital from the taxable base on an annual basis, as was the case prior to the 2005 tax amendments.
This, he argued, would give listed companies an advantage from their presence in the capital market. He noted that the 2005 amendments had led to the exit of many companies from the stock exchange, while others had opted for voluntary delisting due to high listing costs.
These include mandatory advertising expenses related to financial statements and stock market disclosures. He stressed the importance of preventing the exit of large companies following acquisitions, as occurred in the case of Ezz Steel, or granting incentives such as tax exemptions on cash dividends.
Fathi added that it would be preferable for the new incentives to remain in place for a defined grace period, whereby companies that list during a three-year window would be granted tax exemptions for a subsequent three-year period.
Among the incentives currently under discussion are regulations allowing taxpayers to reclaim credit balances directly from their tax returns, thereby ensuring improved liquidity.
The proposals include standardising administrative seizure procedures and the mechanisms for lifting them in an effort to simplify processes and reduce the burdens faced by taxpayers as a result of inconsistent practices in different tax offices.
* A version of this article appears in print in the 15 January, 2026 edition of Al-Ahram Weekly
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