The MPs, led by businessman and deputy chairman of parliament's industry committee Mohamed El-Sallab, said their legislative amendment comes on the heels of Minister of Finance Mohamed Mait announcing early in September that the new Capital Gains Tax law would be implemented in January 2022 as scheduled.
"This announcement did a lot of harm to business and trading on the Egyptian stock market, causing it to suffer losses amounting to EGP 27 billion in two days only," MPs said in a statement.
El-Sallab complained that stock exchange investors are currently suffering from a lot of financial burdens mainly resulting from the coronavirus pandemic and its negative impact on the business climate in Egypt.
"So, it is completely inconvenient for the government to come during these hard times to impose a new tax on investors, disregarding the fact that more taxes lead to scaring businessmen away from investing in the stock market," said El-Sallab, asking for a dialogue between Minister Mait and investors to reach common ground ahead of implementing the new Capital Gains Law next January.
MP Mahmoud El-Saiedi, a member of parliament's Economic Affairs Law, also said MPs and businessmen demand that the implementation of the new Capital Gains Law be postponed as this aims to save the Egyptian stock market from collapse.
"Ahead of the implementation of this tax on January 2022, we expect that a large number of Arab and foreign investors will exit from the Egyptian stock market," said El-Saiedi, adding that "in order to avoid this negative scenario, we propose that either a legislative amendment postponing the implementation of the Capital Gains Tax to January 2023 is to be submitted to parliament and passed as soon as possible, or the Ministry of Finance is to impose a resource development fee that will not be a big financial burden for stock investors."
MP Mohamed Taha El-Khouli, a leading member of the parliamentary majority party Mostaqbal Watan, said "the Ministry of Finance approved postponing the implementation of the Capital Gains Law to the end of 2021 on the grounds that this was an important step to mitigate the negative impact of the coronavirus pandemic on the Egyptian economy."
"But in early September, Minister of Finance Mohamed Mait took all by surprise when he announced that the government is determined that the Capital Gains Law be implemented on the first of January 2022 as scheduled, a move which caused a lot of panic among investors and led them to exit from the Egyptian stock market," said El-Khouli, adding that "as the negative impact of the coronavirus pandemic on the Egyptian economy is still in place, it is important that the implementation of the Capital Gains Tax be postponed to January 2023."
The Capital Gains Law (199/2020) was first passed in July 2014, but the government was forced to postpone its implementation twice (in 2015 and 2017) for six years, opting instead to impose a stamp tax on trading operations.
On 3 September, the Ministry of Finance said the law would be implemented on January 2022 as scheduled, imposing a 10 percent tax on trading operations.
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