EXCLUSIVE- Tax Authority to mark “cost of investment” in treasuries as deductible in new tax treatment: The Tax Authority could allow banks to count the “cost of investment” in state treasuries as an expense that would lower their pre-tax income, authority head Abdel Azim Hussein told Enterprise.

Why does this matter? A new tax treatment for income from investment in government debt (announced this past November, but still not enshrined in law) would force banks and companies to separately account for income derived from their holdings of government debt. Analysts initially said that the new accounting mechanism would result in a c.37% effective tax rate for a model bank.

So what’s the news here? Hussein is holding out the possibility that the hard costs associated with investment in treasuries could be effectively considered tax deductible, helping mitigate the impact of the new tax treatment. He added that the Finance Ministry is working with the Federation of Egyptian Banks to set an industry average for the cost of investing in government debt that will be applied industry-wide. The measure would be introduced in amendments to the executive regulations of the amended Income Tax Act, Hussein said.