Egypt’s government is preparing to submit a draft law to parliament that will eliminate the capital gains tax on stock market transactions, a move aimed at boosting investor confidence and supporting the country’s ongoing efforts to list state-owned companies on the stock exchange. According to four government sources who spoke to Asharq Al-Awsat, the proposed law will also reinstate the “stamp duty” tax on transactions, which was previously imposed.
The proposed change comes after a decade of fluctuations in tax policies for stock market dealings, including both the stamp duty on buy and sell transactions and taxes on cash profits from trading. The capital gains tax, introduced in 2013, was briefly implemented before being scrapped a year later.
One source revealed that the Cabinet has already approved the draft law submitted by the Minister of Finance, which seeks to simplify Egypt’s tax system and reduce the financial burden on investors. The bill will be presented to the House of Representatives this month, with the government aiming to pass it before the end of the current legislative session, which is set to conclude in June 2025.
The government’s move is part of broader efforts to stimulate the stock market, especially as Egypt continues to work on its public offering program, which aims to sell shares in several state-owned companies. Minister of Investment and Trade Hassan Khateeb mentioned last September that the government was considering scrapping the capital gains tax to help make the market more attractive to investors.
According to another government official, the reintroduced stamp duty will be a “small percentage” and is seen as a more suitable alternative, as it will have less impact on investors compared to the capital gains tax. The reimplementation of the tax is expected to generate solid revenues for the government while keeping the market competitive.
The stamp duty, first introduced in 2013, generated significant revenues when it was initially implemented, including 350 million Egyptian pounds in its first year. Over the years, it has contributed millions more as trading volumes increased.
The hope is that the reduced tax burden will help attract more investors, increase trading volumes, and ultimately support Egypt’s ambitious privatization and public offering goals.
With this new initiative, the government is aiming to create a more favorable environment for both domestic and foreign investors and ensure the success of its privatization program. The move also comes amid concerns about slowing demand for certain stocks and declining market valuations, which have raised questions about the effectiveness of the current tax regime in achieving desired financial returns from state-owned company listings.
