Egypt Exempts Residents from Stock Market Stamp Duty

The Egyptian government decided to abolish the stamp tax on stock market transactions for the resident investor to ensure fairness, and to deduct all expenses related to trading and preserving shares and other tax base.

This came during two successive meetings, on Wednesday, held by PM Mostafa Madbouly to discuss ways to support the stock market and improve the investment and business environment, in the presence of a number of ministers and officials, including Mohamed Maait, Minister of Finance, Hisham Tawfiq, Minister of Business Sector, and Ahmed Kajouk, Deputy Minister of Finance for financial policies.

Nader Saad, the official spokesman for the Cabinet pointed out that the meetings held in this regard witnessed flexibility and consensus by all parties, and the Ministry of Finance responded to the technical and legitimate demands made by the Stock Exchange (EGX) administration on behalf of the various market parties, regarding some matters related to the application of tax on profits.

This is in addition to calculating an incentive for the money invested in the stock exchange and deducting it from the tax base to maximize the return of investors and achieve justice among the various savings pools.

The profit will also be calculated by comparing the acquisition price or the closing price of the shares before the start of the application, whichever is higher, to increase the returns of investors; by reducing the tax on the profit achieved in new offerings (IPO) by 50% in the first two years of the law’s issuance, and postponing the payment of tax until the selling process is completed whenever the acquiring party is listed on the Egyptian Stock Exchange to help encourage listed companies to acquire unlisted companies and create large entities that help in market growth.

Saad added that it was agreed that no tax files will be opened for inpidual investors in the stock exchange, and the clearinghouse will calculate and collect the tax after deducting all the expenses that it requested to be entered, and that will be at the end of each year and on the total investment portfolio transactions, while considering capital as a non-taxable event.

It was also agreed to reduce the tax rate on inpidual investors through stock funds to 5% on profit, and to exempt equity investment funds from all taxes on stocks, as well as assigning the fund to calculate and supply them without opening tax files to investors, and to stimulate venture capital investment funds through tax exemption on their dealings in unregistered shares of start-up companies, that's in addition to a tax reduction for policyholders of up to 5% in the event of profits.