EXCLUSIVE- Gov’t mulling tax incentives for prospective EGX listings: The government is studying a proposal to provide tax breaks to companies that decide to list shares on the stock exchange as part of a strategy to drive new listings and increase market capitalization, government sources told us. The proposal could also include breaks on cash dividends for already-listed shares. There will be a single discount rate, as opposed to brackets based on factors such as the number of shares to be listed, the sources said, without disclosing the planned size of the tax breaks.

When can we expect the changes to take hold? The changes are one component of a “package of amendments” which the sources expect will be finalized in no more than 10 days. The amendments are meant to incentivize stock trading activity, and are part of a directive by Prime Minister Moustafa Madbouly. They would restore the old tax rate of 10% on gains from the sale of shares in both EGX-listed and non-listed companies, the details of which we noted last week.

The proposed changes are looking set to make their way to the House of Representatives in its next legislative cycle, which begins in October.

Meanwhile, the provisional stamp tax will remain unchanged at 0.15% until May 2020 under draft amendments approved by the House Planning Committee yesterday. The tax was scheduled to increase to 0.175% on 1 June but the Finance Ministry called off the increase in a move designed to ease the financial burden on traders. The ministry introduced the tax at 0.125% in 2017, and planned to hike it annually over a three-year period.