By Mahmoud Hashem
The Egyptian State Council is currently studying the final executive rule of the law postponing the capital gains tax on the Egyptian Exchange (EGX), according to Minister of Investment Ashraf Salman.
On Tuesday, Salman told Daily News Egypt that the State Council is finalising the draft and the postponement articles. The draft will be given to President Abdel Fattah Al-Sisi, in coordination with the cabinet’s commission advisors, within the next few days.
“I expect that President Al-Sisi will approve the law of suspending the capital gains tax issued by the government in July 2014,” said Salman.
On 18 May, the government announced the postponement of the capital gains tax on EGX trading for two years, but did not issue the executive rule of the law.
Salman added: “The decision to postpone the EGX tax is necessary to deepen the Egyptian market, which is still recovering. We still did not consider what will follow the President’s decision to suspend the tax for two years nor the possibility of issuing it after this period.”
According to Salman, the decision is to impose the tax on income dividends once without imposing an additional tax on the net revenues on a different basis, which is important for businessmen to avoid double taxation.
The government seeks to decrease the budget deficit whilst attracting foreign direct investments to stimulate growth, which was impacted by the political unrest. This political unrest, which started in 2011, affected investors’ trust negatively.
In previous statements to Daily News Egypt, Salman said that approving the law of suspending the tax on capital gains will be applied by 17 May 2015.
“We will give back investors the tax value collected from them since 17 May and until the date when law of suspending the tax is printed in the official gazette,” Salman said. “The Egyptian investor did not pay the tax since its collection in July 2014. On the contrary, foreign investors paid the tax. So we are obliged to conduct clearing between what was collected from the foreign investor since 17 May 2015 until the law’s issuance date, and what was paid since the collection date started, to compensate for the foreign investor.”
In terms of the Egyptian investor, they will be obliged to pay the tax for the period between July 2014 and 17 May 2015, by the end of the year,” the minister said.