Finance Minister Samir Radwan (Photo: Reuters)
Egypt's proposed capital gains tax is still being studied. A meeting involving the Minister of Finance, his staff and Bourse representatives is currently being held to decide the fate of a tax widely criticised by Bourse investors.
Two informed source tell Ahram Online that the issue is still “under negotiation”.
“The decision will be announced in the afternoon," said one source.
Reuters earlier reported statements by the head of the Egyptian Exchange saying that an agreement had been reached to exempt listed companies from the proposed dividend tax.
Trying to cover the proposed budget’s 10 per cent deficit, the Ministry of Finance announced that Egypt would introduce a 10 per cent tax on capital gains, specifically on dividend distribution.
The proposed tax, slated to generate less than LE2 billion in extra revenues, faced extensive criticisms from economists and investors.
Mona El-Baradie, economics professor at Cairo University, sees cancellation of the capital gains tax as a positive move as it would not have had a significant impact of Egypt’s revenues.
“The tax just sent a negative message to already worried investors; at such times Egypt needs to reassure international markets of the country’s support to private investment,” she says.
News about the proposed tax caused the stock exchange to slump by 2.65 per cent last Thursday, stirring wide disapproval among investment circles who dubbed it “untimely” given the country’s current economic troubles.