Egypt extends capital gains tax freeze for three years

CAIRO, March 22, (RTRS): The Egyptian government approved on Tuesday the extension of a freeze on a capital gains tax for three years from May 17, the state news agency MENA reported.

The country originally imposed a 10 percent tax on capital gains in July, 2014, as part of efforts to replenish depleted state coffers, but the following year suspended the tax under pressure from investors for a period of two years. Tuesday’s decision extends that freeze for another three years.

The cabinet also approved a stamp duty on stock exchange transactions for both buyers and sellers set at 1.25 Egyptian pounds per 1,000 for the first year of the tax’s introduction, rising to 1.5 pounds in the second year and 1.75 in the third.

It will also impose a levy of 3 pounds per 1,000 for investors buying or selling more than a third of a company’s stocks.

The Finance Ministry targets raising revenues of 1-1.5 billion Egyptian pounds ($54.8 million-$82.2 million) in the first year of the new stamp duty, Deputy Finance Minister Amr al-Munayer told Reuters on Monday.

The extension to the capital gains tax freeze and the new stamp duty were introduced in a bill amending Egypt’s income tax laws and are subject to a vote in parliament before President Abdel Fattah al-Sisi can sign it into law.

Investors had said the capital gains tax discouraged business at a time Egypt was struggling to recover from the 2011 uprising and subsequent political upheaval.

Also:

CAIRO: Egypt is targeting $9 billion in foreign financing in the 2017-18 fiscal year, Deputy Finance Minister Ahmed Kouchouk told Reuters on Wednesday.

The financing will be divided between $3 billion obtained from debt markets and $5 billion to $6 billion from international finance institutions, he said.

Egypt agreed with the International Monetary Fund in November on a $12 billion, three-year loan programme to support government efforts to reduce its budget deficit and balance its currency market.

The finance minister said last week he expects Egypt to receive the second tranche of this loan, expected to be $1.25 billion, in May or June.

Egypt is also expected to receive additional tranches of loans from the World Bank and African Development Bank in 2017-18, which together would total $1.5 billion.

Kouchouk said the $3 billion from debt markets could come in the form of Eurobonds denominated in dollars or other currencies as well as Sukuk.

He did not say when Egypt was likely to tap debt markets during the coming fiscal year, which begins in July.

Egypt raised $4 billion in sales of Eurobonds earlier this year at lowerthan-expected yields, with demand for the bonds high.