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Tuesday, 17 March 2020

Egypt to postpone EGX capital gains for one more year, slash stamp tax -sources

Gov’t to postpone EGX capital gains for one more year, slash stamp tax -sources: Officials have reportedly agreed to delay reintroducing the capital gains on EGX transactions for one more year, and are planning to cut the provisional stamp tax to 0.05% from 0.15%, Al Mal reports, quoting unnamed sources it said have knowledge of the move. The decision was due to be presented yesterday to the cabinet economic group for review, but we have yet to see any official confirmation. Government sources told the press yesterday that there is a near consensus in the cabinet for the move given current market conditions.

Background: The government said in 2017 it was shelving for three years a proposed 10% capital gains tax on stock market transactions after a revolt by investors, and instead introduced a 0.125% stamp tax that was planned to rise to 0.15% and then 0.175%. Now, with the EGX following the sell-off in the global markets sparked by the covid-19 outbreak, authorities have decided to suspend the reintroduction of capital gains tax by an additional year. The capital gains tax was an IMF recommendation as part of conditions for the USD 12 bn facility, but sources said in May that the tax would not be brought into effect in the near future.

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