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EGX celebrates freezing capital gains tax, rises 0.91% - Daily News Egypt

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EGX celebrates freezing capital gains tax, rises 0.91%

The decision will attract new investors, and lead next governmental and private IPOs to succeed

EGX30, the major index of the Egyptian Exchange (EGX), rose 0.91% on Wednesday, affected by the decision of the Supreme Council for Investment on Tuesday to stop imposing the capital gains tax on the EGX for three years starting from May 2017. Wednesday’s session is the fifth in a row to register positive results.

Chairperson of the EGX, Mohamed Omran, said that the decisions of the Supreme Council for Investment will contribute to attracting more investors.

He continued saying that freezing the capital gains tax will increase the chances of success for future initial public offerings (IPOs), whether governmental or private ones.

Former deputy chairperson of the EGX, Mohamed Farid, said that freezing the tax is a positive message for investors, and will help to restore their trust in the Egyptian capital market.

He added that the EGX is an important tool for exiting, as well as an important tool for expanding the base of the companies’ ownership, in addition to providing the needed financing to the companies. Freezing that tax will increase the competitiveness of the EGX among its counterparts in the region.

In July 2014, the government had adopted imposing a 10% tax on the cash dividends besides a 10% tax on the capital gains achieved from investing in the EGX. Nevertheless, in May 2015, it had frozen only the capital gains tax for two years, after investors strongly objected.

Due to the recent decision, the capital gains made from investing in the EGX will remain exempted until May 2020.

Farid said that the decision came at the right time, closing the door for any speculations before May 2017, the date the tax was supposed to be activated in.

Decisions of the Supreme Council for Investment included also increasing the number of public companies—of which 20-24% of capital will be offered through the EGX in the next three years. The newly added companies include the Egyptian Rural Development Company, the New Administrative Capital, New El-Alamein City, and power plants.

Farid said that these decisions are a positive indicator for investors, and will contribute to expanding the ownership base of a number of public companies. It is an attempt by the government to improve the investment climate in Egypt, praising the Supreme Council for Investment for its positive and well-timed decisions.

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