Cabinet announces incentive package aiming to boost EGX

Doaa A.Moneim , Thursday 11 Nov 2021

Egypt’s cabinet announced on Wednesday a package of incentivising procedures with an objective of boosting the Egyptian Exchange (EGX) and enhancing the climate of investment in the capital market.

stock market
File photo: Egypt stock market. Reuters

These incentives include cancelling the duty stamp imposed on EGX transactions for resident investors with the aim of ensuring that investors do not pay taxes in case of attaining loses.

EGX investors and capital market experts called on cancelling this type of tax to make the EGX attractive for local and foreign investors.

The cabinet also announced that it will now impose a capital gains tax.

Furthermore, it decided to deduct all expenses related to trading, preserving shares, and other tax liabilities on investors.

For the sake of raising investors’ returns, the procedures include calculating their profits by comparing the acquisition price or the closing price of the shares — whichever is higher — to the selling price.

Moreover, investors will obtain a financial incentive to be calculated and deducted from their tax liabilities in the event they achieve profits in order to achieve justice among the various tax bases.

For the new offerings on the EGX, the cabinet directed the concerned authorities to deduct taxes imposed on their returns by 50 percent during the first two years of the offering; related law issuance and tax collection will be delayed until the selling process is done on the condition that the acquiring party is listed in the EGX.

The cabinet also instructed to exempt EGX investors from opening a tax record, choosing instead for their taxes to be imposed on the total of their individual investment portfolios, which will be calculated by end of every year.

Additionally, it also decided to establish a special unit to ease any procedures for EGX investors in the General Authority for Investment and Free Zones.

The preference shares issuance system will be redressed as well to be more flexible.

The cabinet also directed to reduce the tax rate imposed on the EGX’s individual investors through stock funds to 5 percent on attained profits.

It exempted equity investment funds from all taxes imposed on shares as well, while assigning the invest fund itself to calculate them.

Additionally, transactions related to venture capital investment funds and their unrestricted shares of start-ups will have some exemptions.

Policyholders will also earn a tax reduction of 5 percent in the event of attaining returns.

Egyptian Cabinet Spokesperson Nader Saad said in a statement that these incentives came as a result of prolonged meetings the prime minister held with the minister of finance and representatives of the public business sector, along with the chairman of the EGX, the Financial Regulatory Authority’s head, and a number of capital market leaders, experts, and legislators.

Short link: