CAIRO: Egypt’s Ministry of Finance approved Tuesday evening a number of amendments to the executive regulations of the income-tax law to accommodate recently introduced capital-market taxes.
According to the new regulations, dividend distributions to individual investors with an annual turnover not exceeding 5 million EGP will only be subject to a 5-10 percent tax. Dividend distributions to those with an annual turnover exceeding 5 million EGP, however, will be subject to the general income tax.
In July, President Abdel Fatah al-Sisi approved a 10 percent capital gains tax on stock market profits and dividends, amid efforts to increase state revenues to revive Egypt’s limping economy.
The decision was shocking to many traders in the Egyptian Exchange (EGX) who have called for the abolition of this tax or suspending it for three years, at least until the economy recovers from four years of deterioration triggered from political unrest following the January 25 Revolution.
Dozens of disappointed retailers organized a protest outside the headquarters of the EGX last week, calling for the removal of its chairman whom they blamed for a market plunge over the past weeks that neglecting all positive drivers resulted from the economic conference which had garnered investments worth $72.5 billion.
In response, Omran urged the government to suspend the tax for at least one year during a Monday conference, affirming that the current circumstances in the capital market are not appropriate to impose such taxes.
Expressing his personal rejection to applying any tax on stock market profits, Omran urged the government suspend this tax, as the EGX’s competitiveness is suffering among other markets in the region, especially after Qatar, Saudi Arabia and the UAE allowed foreigners to trade in their respective stock markets.
During the course of last month, the benchmark index EGX30 dropped 2.13 percent to end the month at 9,134 points, down from 9,334 at February-end. Further, the small and mid-cap index plunged 7.2 percent, ending the month at 517.6 points, compared to 558 points a month earlier. The broader index EGX100 also dipped 6.2 percent to close the month at 1,045 points.
The escalated tension in Yemen also weighed on EGX indexes, as Egypt backed the Saudi-led Arab military airstrikes targeting Yemen’s Houthi fighters.
Delay of executive regulations for a tax approved nine months ago along with regional tensions also affected trade volumes and value which saw a remarkable slip in March, totaling 24.2 billion EGP, down from 33.9 billion EGP, according to the EGX monthly report.
However, Egypt’s Finance Minister cited the market’s recent slide to regional tension and price corrections, Reuters reported Tuesday.