Staff at the Egyptian stock exchange in Cairo (Photo: AP)
The Egyptian stock exchange saw its main index rise significantly on Monday on news reports the government has decided to freeze the implementation of a controversial 2014-issued capital gains tax for two years.
Benchmark index, EGX30, climbed almost five percent in the 30 minutes of trading pre-session, regaining some of the losses the market has suffered since the ministry of finance announced bylaws for implementing the tax in April.
"The bourse's performance on Monday is definitely a result of the news the government is holding the capital gains tax," Head of Equities at Pharos Holding Mohamed Radwan told Ahram Online.
In July 2014, the government imposed a Bourse tax on investors as part of hits efforts to overhaul an economy battered by years of political turmoil. The tax comprised of a capital gains component and stock dividends's duty.
Two government sources who attended a late night government meeting on the future of the controversial tax told Reuters on Monday that Egypt will maintain a ten percent tax on stock dividends.
Critics of the tax have charged that ambiguous collection mechanisms of the capital gains tax would create uncertainty in the market and impede investment.
A group of Egyptian investors have challenged the tax in court last month.